Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document and Entity Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2022 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-39838 |
Entity Registrant Name | Gracell Biotechnologies Inc. |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | Building 12, Block B, Phase II |
Entity Address, Address Line Two | Biobay Industrial Park |
Entity Address, Address Line Three | 218 Sangtian St. |
Entity Address, City or Town | Suzhou |
Entity Address, Postal Zip Code | 215123 |
Entity Address, Country | CN |
Entity Common Stock, Shares Outstanding | 338,498,819 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
ICFR Auditor Attestation Flag | true |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0001826492 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2022 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Auditor Name | PricewaterhouseCoopers Zhong Tian LLP |
Auditor Location | Shanghai, the People’s Republic of China |
Auditor Firm ID | 1424 |
Business Contact [Member] | |
Document and Entity Information | |
Entity Address, Address Line One | Building 12, Block B, Phase II |
Entity Address, Address Line Two | Biobay Industrial Park |
Entity Address, Address Line Three | 218 Sangtian St. |
Entity Address, City or Town | Suzhou |
Entity Address, Postal Zip Code | 215123 |
Entity Address, Country | CN |
Contact Personnel Name | Yili Kevin Xie |
Country Region | 86 |
City Area Code | 512 |
Local Phone Number | 6262-6701 |
Contact Personnel Email Address | Email: ir@gracellbio.com |
American depositary shares | |
Document and Entity Information | |
Title of 12(b) Security | American depositary shares (one Americandepositary share representing five ordinaryshares, par value US$0.0001 per share) |
Trading Symbol | GRCL |
Security Exchange Name | NASDAQ |
Ordinary shares | |
Document and Entity Information | |
Title of 12(b) Security | Ordinary shares, par valueUS$0.0001 per share |
Security Exchange Name | NASDAQ |
No Trading Symbol Flag | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 1,454,645 | $ 210,904 | ¥ 1,829,006 |
Short-term investments | 3,559 | 516 | 3,615 |
Prepayments and other current assets | 37,551 | 5,443 | 52,459 |
Total current assets | 1,495,755 | 216,863 | 1,885,080 |
Property, equipment and software, net | 123,126 | 17,852 | 123,818 |
Operating lease right-of-use assets | 21,546 | 3,124 | 29,652 |
Other non-current assets | 15,849 | 2,298 | 21,587 |
TOTAL ASSETS | 1,656,276 | 240,137 | 2,060,137 |
Current liabilities: | |||
Accruals and other current liabilities (including accruals and other current liabilities of the consolidated VIEs without recourse to the Company of RMB35,685 and RMB41,425 as of December 31, 2021 and 2022, respectively) | 85,991 | 12,467 | 69,120 |
Short-term borrowings (including short-term borrowings of the consolidated VIEs without recourse to the Company of RMB66,100 and RMB104,600 as of December 31, 2021 and 2022, respectively) | 104,600 | 15,166 | 66,100 |
Operating lease liabilities, current (including operating lease liabilities, current of the consolidated VIEs without recourse to the Company of RMB4,367 and RMB4,998 as of December 31, 2021 and 2022, respectively) | 17,545 | 2,544 | 17,527 |
Amounts due to a related party | 4,662 | 676 | |
Current portion of long-term borrowings (including current portion of long-term borrowings of the consolidated VIEs without recourse to the Company of RMB2,376 and RMB7,844 as of December 31, 2021 and 2022, respectively) | 7,844 | 1,137 | 2,376 |
Total current liabilities | 220,642 | 31,990 | 155,123 |
Operating lease liabilities, non-current (including operating lease liabilities, non-current of the consolidated VIEs without recourse to the Company of RMB730 and RMB4,436 as of December 31, 2021 and 2022, respectively) | 6,485 | 940 | 14,830 |
Long-term borrowings (including long-term borrowings of the consolidated VIEs without recourse to the Company of RMB54,349 and RMB46,505 as of December 31, 2021 and 2022, respectively) | 46,505 | 6,743 | 54,349 |
Other non-current liabilities | 6,879 | 997 | 8,464 |
TOTAL LIABILITIES | 280,511 | 40,670 | 232,766 |
Commitments and contingencies | |||
Shareholders' equity: | |||
Ordinary shares (par value of US$0.0001 per share; 500,000,000 and 500,000,000 shares authorized; 337,969,926 and 338,498,819 shares issued and outstanding as of December 31, 2021 and 2022, respectively) | 223 | 32 | 223 |
Additional paid-in capital | 2,927,295 | 424,418 | 2,902,856 |
Accumulated other comprehensive (loss) income | 73,528 | 10,661 | (57,936) |
Accumulated deficit | (1,625,281) | (235,644) | (1,017,772) |
Total shareholders' equity | 1,375,765 | 199,467 | 1,827,371 |
TOTAL LIABILITIES, AND SHAREHOLDERS' EQUITY | ¥ 1,656,276 | $ 240,137 | ¥ 2,060,137 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 CNY (¥) shares |
Accounts payable and accrued liabilities, current | ¥ 85,991 | ¥ 69,120 |
Ordinary shares, shares authorized | shares | 500,000,000 | 500,000,000 |
Common stock shares issued | shares | 338,498,819 | 337,969,926 |
Common stock, shares, outstanding | shares | 338,498,819 | 337,969,926 |
Short term borrowings | ¥ 104,600 | ¥ 66,100 |
Operating lease liabilities, current | 17,545 | 17,527 |
Current portion of long-term borrowings | 7,844 | 2,376 |
Operating lease liabilities, non-current | 6,485 | 14,830 |
Long term borrowings net of current portion | 46,505 | 54,349 |
Variable Interest Entity, Primary Beneficiary | ||
Accounts payable and accrued liabilities, current | 41,425 | 35,685 |
Short term borrowings | 104,600 | 66,100 |
Operating lease liabilities, current | 4,998 | 4,367 |
Current portion of long-term borrowings | 7,844 | 2,376 |
Operating lease liabilities, non-current | 4,436 | 730 |
Long term borrowings net of current portion | ¥ 46,505 | ¥ 54,349 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Revenues | ||||
Licensing and collaboration revenue | ¥ | ¥ 366 | |||
Expenses | ||||
Research and development expenses | ¥ (485,388) | $ (70,375) | (326,899) | ¥ (168,830) |
Administrative expenses | (139,270) | (20,192) | (137,040) | (45,566) |
Loss from operations | (624,658) | (90,567) | (463,573) | (214,396) |
Interest income | 23,917 | 3,468 | 9,116 | 2,870 |
Interest expense | (6,737) | (977) | (5,063) | (2,155) |
Other income | 8,001 | 1,160 | 9,120 | 4,707 |
Foreign exchange loss, net | (8,169) | (1,184) | (1,297) | (2,914) |
Others, net | 159 | 23 | (57) | (12) |
Loss before income tax | (607,487) | (88,077) | (451,754) | (211,900) |
Income tax expense | (22) | (3) | ||
Net loss | (607,509) | (88,080) | (451,754) | (211,900) |
Accretion of convertible redeemable preferred shares to redemption value | ¥ | (1,989) | (62,733) | ||
Net loss attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | (607,509) | (88,080) | (453,743) | (274,633) |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustments, net of nil tax | 131,464 | 19,060 | (34,024) | (20,753) |
Total comprehensive loss attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | ¥ (476,045) | $ (69,020) | ¥ (487,767) | ¥ (295,386) |
Weighted average number of ordinary shares used in per share calculation: | ||||
-Basic | shares | 338,342,051 | 338,342,051 | 328,866,599 | 99,044,776 |
-Diluted | shares | 338,342,051 | 338,342,051 | 328,866,599 | 99,044,776 |
Net loss per share attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | ||||
-Basic | (per share) | ¥ (1.80) | $ (0.26) | ¥ (1.38) | ¥ (2.77) |
-Diluted | (per share) | ¥ (1.80) | $ (0.26) | ¥ (1.38) | ¥ (2.77) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Foreign currency translation adjustments tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) ¥ in Thousands, $ in Thousands | Ordinary shares CNY (¥) shares | Additional paid-in capital CNY (¥) | Accumulated other comprehensive loss CNY (¥) | Accumulated deficit CNY (¥) | CNY (¥) shares | USD ($) shares |
Beginning Balance at Dec. 31, 2019 | ¥ 68 | ¥ (3,159) | ¥ (289,396) | ¥ (292,487) | ||
Beginning Balance (Shares) at Dec. 31, 2019 | shares | 99,044,776 | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Net loss | (211,900) | (211,900) | ||||
Accretions of convertible redeemable preferred shares to redemption value | (62,733) | (62,733) | ||||
Foreign currency translation adjustment | (20,753) | (20,753) | ||||
Ending Balance at Dec. 31, 2020 | ¥ 68 | (23,912) | (564,029) | (587,873) | ||
Ending Balance (Shares) at Dec. 31, 2020 | shares | 99,044,776 | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Net loss | (451,754) | (451,754) | ||||
Accretions of convertible redeemable preferred shares to redemption value | (1,989) | (1,989) | ||||
Foreign currency translation adjustment | (34,024) | (34,024) | ||||
Share-based compensation | ¥ 60,384 | 60,384 | ||||
Conversion of preferred shares to ordinary shares upon the completion of initial public offering ("IPO") | ¥ 113 | 1,409,412 | 1,409,525 | |||
Conversion of preferred shares to ordinary shares upon the completion of initial public offering ("IPO") (Shares) | shares | 173,771,220 | |||||
Issuance of ordinary shares upon IPO and over-allotment, net of issuance cost | ¥ 41 | 1,431,316 | 1,431,357 | |||
Issuance of ordinary shares upon IPO and over-allotment, net of issuance cost (Shares) | shares | 63,250,000 | |||||
Exercise of options and registration restricted share units | ¥ 1 | 1,744 | ¥ 1,745 | |||
Exercise of options and registration restricted share units (Shares) | shares | 1,903,930 | 530,110 | 530,110 | |||
Ending Balance at Dec. 31, 2021 | ¥ 223 | 2,902,856 | (57,936) | (1,017,772) | ¥ 1,827,371 | |
Ending Balance (Shares) at Dec. 31, 2021 | shares | 337,969,926 | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Net loss | (607,509) | (607,509) | $ (88,080) | |||
Foreign currency translation adjustment | 131,464 | 131,464 | $ 19,060 | |||
Share-based compensation | 24,102 | 24,102 | ||||
Exercise of options and registration restricted share units | 337 | ¥ 337 | ||||
Exercise of options and registration restricted share units (Shares) | shares | 528,893 | 164,815 | 164,815 | |||
Ending Balance at Dec. 31, 2022 | ¥ 223 | ¥ 2,927,295 | ¥ 73,528 | ¥ (1,625,281) | ¥ 1,375,765 | $ 199,467 |
Ending Balance (Shares) at Dec. 31, 2022 | shares | 338,498,819 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 CNY (¥) | |
Cash flows from operating activities: | |||||
Net loss | ¥ (607,509) | $ (88,080) | ¥ (451,754) | ¥ (211,900) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation of property, equipment and software | 58,766 | 8,520 | 44,870 | 21,589 | |
Share-based compensation | 24,102 | 3,494 | 60,384 | ||
Amortization of right-of use assets and interest of lease liabilities | 18,742 | 2,717 | 15,397 | ||
Foreign exchange (gain) loss, net | 8,169 | 1,184 | 1,297 | 2,914 | |
Changes in operating assets and liabilities: | |||||
Prepayments and other current assets | 14,096 | 2,044 | (10,040) | (18,295) | |
Amounts due to related parties | 4,662 | 676 | |||
Accrued liabilities and other current liabilities | 16,871 | 2,446 | 43,760 | 7,543 | |
Other non-current assets | (1,619) | ||||
Lease liabilities | (18,963) | (2,749) | (15,309) | ||
Other non-current liabilities | (1,584) | (230) | 8,464 | ||
Net cash used in operating activities | (482,648) | (69,978) | (304,550) | (198,149) | |
Cash flows from investing activities: | |||||
Purchase of property, equipment and software | (48,388) | (7,016) | (56,743) | (79,400) | |
Investments in short-term investments | (261,166) | (37,866) | (10,000) | (28,055) | |
Proceeds from disposal of short-term investments | 261,222 | 37,874 | 25,127 | 13,514 | |
Net cash used in investing activities | (48,332) | (7,008) | (41,616) | (93,941) | |
Cash flows from financing activities: | |||||
Proceeds from initial public offering and over-allotment, net of underwriting commissions | 1,448,959 | ||||
Proceeds from exercise of options and registration of restricted share units | 337 | 49 | 1,745 | ||
Repayment of convertible loans | (138,695) | ||||
Proceeds from issuance of convertible redeemable preferred shares, net of issuance costs | 795,420 | ||||
Proceeds from bank borrowings | 104,600 | 15,166 | 71,233 | 103,008 | |
Repayments of bank borrowings | (68,476) | (9,928) | (51,294) | (122) | |
Payment of initial public offering costs | (14,458) | (3,144) | |||
Payment of offering costs | (3,137) | (455) | |||
Net cash generated from financing activities | 33,324 | 4,832 | 1,456,185 | 756,467 | |
Effect of exchange rate on cash and cash equivalents | 123,295 | 17,877 | (35,321) | (22,127) | |
Net increase (decrease) in cash and cash equivalents | (374,361) | (54,277) | 1,074,698 | 442,250 | |
Cash and cash equivalents at the beginning of year | 1,829,006 | 265,181 | 754,308 | 754,308 | ¥ 312,058 |
Cash and cash equivalents at the end of year | 1,454,645 | 210,904 | 1,829,006 | 754,308 | 754,308 |
Supplemental cashflow disclosures: | |||||
Interest paid | ¥ 6,737 | $ 977 | 5,063 | 2,155 | |
Non-cash activities: | |||||
Accretion of convertible redeemable preferred shares to redemption value | ¥ 1,989 | 62,733 | ¥ 36,802 | ||
Payables for deferred initial public offering cost | ¥ 14,924 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2022 | |
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 December 31, 2022, the Company’s principal subsidiaries 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 On January 12, 2021, the Company completed its Initial Public Offering and became listed on the Nasdaq Global Selected Market (see Note 9 for details). 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 distribute 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 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 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 the VIE under U.S. GAAP; ● 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 the ultimate primary beneficiary of 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, 2021 and 2022 and for each of the three years in the period ended December 31, 2022 is included in the accompanying consolidated financial statements of the Group as follows: As of December 31, 2021 2022 RMB RMB US$ (Note 2) ASSETS Current assets: Cash and cash equivalents 122,220 110,479 16,018 Short-term investments 3,615 3,559 516 Amounts due from related parties 65,705 93,705 13,586 Prepayments and other current assets 40,968 20,675 2,998 Total current assets 232,508 228,418 33,118 Property, equipment and software 60,944 44,742 6,487 Operating lease, right-of-use assets 4,827 7,911 1,147 Other non-current assets 7,983 2,746 398 TOTAL ASSETS 306,262 283,817 41,150 LIABILITIES Current liabilities: Amounts due to related parties 486,794 676,174 98,036 Accruals and other current liabilities 35,685 41,425 6,006 Short-term borrowings 66,100 104,600 15,166 Operating lease liabilities, current 4,367 4,998 725 Current portion of long-term borrowings 2,376 7,844 1,137 Total current liabilities 595,322 835,041 121,070 Amounts due to related parties 59,500 59,500 8,627 Long-term borrowings 54,349 46,505 6,742 Operating lease liabilities, non-current 730 4,436 643 TOTAL LIABILITIES 709,901 945,482 137,082 For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Total revenue from related parties 16,906 16,226 26,415 3,830 Net loss (100,195) (225,650) (263,157) (38,154) For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Net cash used in operating activities (84,862) (166,777) (210,598) (30,534) Net cash used in investing activities (68,628) (2,730) (9,055) (1,313) Net cash generated from financing activities 161,086 241,978 207,912 30,144 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (d) Contractual agreements with the VIE (Continued) Risks in relation to the VIE structure (Continued) The VIE provided research and development related service to the WFOE and recognized revenue of RMB16.9 million, RMB16.2 million and RMB26.4million in the years ended December 31, 2020, 2021 and 2022, respectively. The VIE received business cooperation support from the WFOE and recognized administrative expenses of nil, RMB23.0 million and RMB16.6 million in total in the year ended December 31,2020, 2021 and 2022, respectively. The VIE received loans from the Company of RMB6.9 million, RMB29.6 million and nil in total in the years ended December 31, 2020 and 2021 and 2022, respectively. The VIE received loans from the WFOE of RMB190.0 million, RMB192.5 million and RMB171.8 million in total in the years ended December 31, 2020, 2021 and 2022, respectively. 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 consolidate 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 | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompany consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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 year ended December 31, 2022 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB6.8972, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2022. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2022, or at any other rate. The US$ convenience translation is not required under U.S. GAAP. 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. 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 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 years ended December 31, 2020, 2021 and 2022. 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 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 years ended December 31, 2020, 2021 and 2022, no specific subsidies were received by the Group. Other subsidies of RMB 4,707, RMB 9,120 and RMB8,001 for the years ended December 31, 2020, 2021 and 2022 respectively are recognized as other income upon receipt as further performance by the Group is not required. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. The Group had no finance leases for the years ended December 31, 2021 and 2022. 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. The Group, as an emerging growth company, elected to early adopt the standard for annual reporting period beginning January 1, 2021, utilizing the modified retrospective transition method. The Group has recorded lease assets and liabilities of approximately RMB 24.5 million on its consolidated balance sheet on January 1, 2021, with no material impact to its consolidated statements of comprehensive loss and consolidated statements of cash flows. After the initial adoption of ASC 842 on January 1, 2021, lease liability is measured at the present value of future base rent over the remaining lease terms discounted at 5%, which represents the incremental borrowing rate on January 1, 2021 for a 72 months loan term in China. ROU asset is measured as the initially recognized ROU asset less the difference between (a) cumulative straight-line expense recognized after January 1, 2021 and (b) cumulative accretion of the lease liability under the effective interest rate method after January 1, 2021. As of December 31, 2021 and 2022, the Company had operating lease ROU assets of RMB 29.7 million and RMB 21.5 million respectively, and operating lease liabilities of RMB 32.4 million and RMB 24.0 million respectively. Comprehensive income (loss) Comprehensive income (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 income (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 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 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. The Company early adopted Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, from the earliest period presented to recognize the effect of forfeiture in compensation cost when they occur. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net loss per share In accordance with ASC 260, Earnings Per Share 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 RMB 4.29 million, RMB 15.74 million and RMB 20.59 million for the years ended December 31, 2020, 2021 and 2022, respectively. Concentration of risks Concentration of credit risk As of December 31, 2021 and 2022, the aggregate amount of cash and cash equivalents and short-term investments of RMB 1,822,364 and RMB 1,403,024 respectively, were held at major financial institutions located in the mainland of China, and RMB 10,257 and RMB 55,180, 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 depreciation of approximately 2.5% and appreciation of 9.2% in the years ended December 31, 2021 and 2022, respectively. 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies the accounting for income taxes as part of the FASB’s overall initiative to reduce complexity in accounting standards. The amendments include removal of certain exceptions to the general principles of ASC 740, Income taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. The update is effective for annual periods beginning after December 15, 2021. Certain amendments in this update should be applied retrospectively or modified retrospectively, all other amendments should be applied prospectively. The Group has adopted ASU 2019-12 and the impact of this adoption was assessed to be not material. New and amended standards not yet 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, 2023, including interim periods within fiscal years beginning after December 15, 2023 for the Group. The Group does not plan to early adopt ASU 2016-13 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 | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 RMB RMB US$ (Note 2) Deductible value-added tax input 40,690 26,330 3,817 Prepayments for CRO and other services 4,614 5,296 768 Deposits 4,083 3,355 486 Deferred expenses 531 408 59 Prepayment for raw materials 2,335 1,448 210 Others 206 714 103 52,459 37,551 5,443 |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 RMB RMB US$ (Note 2) Machinery and laboratory equipment 100,693 138,049 20,015 Leasehold improvements 85,177 101,048 14,651 Computer Software 2,809 10,417 1,510 Construction in Progress 5,149 283 41 Others 4,785 6,890 999 Total property, equipment and software 198,613 256,687 37,216 Less: accumulated depreciation and amortization (74,795) (133,561) (19,364) Property, equipment and software, net 123,818 123,126 17,852 Depreciation and amortization expenses recognized for the years ended December 31, 2020, 2021 and 2022 were RMB 21,589, RMB 44,870 and RMB 58,766, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | 5. LEASES As of December 31, 2022, 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, 2021 and 2022 is as follows. As of December 31, 2021 2022 RMB RMB US$ (Note 2) Assets Operating lease right-of-use assets 29,652 21,546 3,124 Liabilities Operating lease liabilities, current 17,527 17,545 2,544 Operating lease liabilities, non-current 14,830 6,485 940 32,357 24,030 3,484 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 December 31, 2022: RMB US$ (Note 2) For the years ending: 2023 18,151 2,632 2024 5,029 729 2025 1,623 235 2026 — — 2027 and thereafter — — Total undiscounted lease payments 24,803 3,596 Less: imputed interest (773) (112) Total lease liabilities 24,030 3,484 For the years ended December 31, 2021 and 2022, total operating lease expense amounted to RMB16,338 and RMB18,742 respectively. The below table summarizes lease costs and other information for the year ended December 31, 2022: As of December 31, 2022 RMB US$ Lease costs (Note 2) Operating lease cost 18,742 2,717 Short-term lease cost 1,580 229 Total lease cost 20,322 2,946 Other information Cash paid for amounts included in the measurement of lease liabilities 18,963 2,749 Right-of-use assets obtained in exchange for new operating lease liabilities 9,345 1,355 Weighted-average remaining lease term 1.13 years 1.13 years Weighted-average discount rate 5.0 % 5.0 % For the year ended December 31, 2022, the Company did not have variable lease cost or sublease income. |
OTHER NON-CURRENT ASSETS
OTHER NON-CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 RMB RMB US$ (Note 2) Prepayment for property, equipment and software 19,968 10,282 1,491 Long-term deposit 1,619 2,430 352 Others — 3,137 455 21,587 15,849 2,298 |
ACCRUALS AND OTHER CURRENT LIAB
ACCRUALS AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 RMB RMB US$ (Note 2) Accrued external research and development related expenses 36,389 47,073 6,825 Salary and welfare payables 20,909 20,622 2,990 Professional service fees 5,161 10,252 1,486 Deferred income for reimbursement of the expenses related to the establishment of the ADS facility 2,902 2,902 421 Others 3,759 5,142 745 69,120 85,991 12,467 |
BORROWINGS
BORROWINGS | 12 Months Ended |
Dec. 31, 2022 | |
BORROWINGS | |
BORROWINGS | 8. BORROWINGS As of December 31, 2021 2022 RMB RMB US$ (Note 2) Current Short-term borrowings: Bank loans 66,100 104,600 15,166 Current portion of long-term borrowings 2,376 7,844 1,137 Total current borrowings 68,476 112,444 16,303 Non-Current Long-term borrowings: Bank loans 54,349 46,505 6,743 Total non-current borrowings 54,349 46,505 6,743 Total borrowings 122,825 158,949 23,046 8. BORROWINGS (CONTINUED) Short-term borrowings In June, July, August, November and December 2021, Suzhou Gracell entered into five loan agreements with China Construction Bank, under which Suzhou Gracell borrowed RMB6.1 million, RMB5.0 million, RMB5.0 million, RMB5.0 million, RMB5.0 million, respectively, for a term of 12 months at a fixed annual rate equal to the one-year loan prime rate plus 0.45%. These loans were paid back to the bank during 2022. 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. Other than the interest rate, these loan agreements with China Construction Bank have substantially the same terms and conditions. The effective interest rate of these borrowing is 3.65% to 4.35% per annum. In March 2021, Suzhou Gracell entered into a loan agreement with China CITIC Bank. Under the agreement Suzhou Gracell borrowed a principal amount of RMB10.0 million in the form of a term loan for 12 months. Interest on the outstanding loan balance accrues at a fixed annual rate equal to the one-year loan prime rate plus 0.15%. 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. This loan was paid back to the bank during 2022. 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. Suzhou Gracell is required to make interest payments on the loans on a monthly basis and repay the principal at the end of the loan term. In October and November 2021, Suzhou Gracell entered into two loan agreements with Hangzhou Bank. Under the agreements, Suzhou Gracell borrowed principal amounts of RMB10.0 million and RMB20.0 million in the form of two term loans for 12 months. The effective interest rate of these borrowings is 4.35% 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. These loans were paid back to the bank during 2022. In March and August 2022, Suzhou Gracell entered into two loan agreements with Hangzhou Bank. Under the agreements, Suzhou Gracell borrowed principal amounts of RMB20.0 million and RMB15.0 million in the form of two term loans for 12 months. The effective interest rate of these borrowings is 4.35% and 3.76% per annum respectively. 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. 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 December 31, 2022. The effective interest rate of these borrowings is 4.85% to 5.00% per annum. 8. BORROWINGS (CONTINUED) Long-term borrowings (continued) In July 2020, Suzhou Gracell entered into a loan agreement with China Merchants Bank, under which Suzhou Gracell obtained a term loan facility of RMB29.0 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 RMB13.87 million within the facility limit and repaid RMB3.80 million as of December 31, 2022. The effective interest rate of these borrowings is 4.85% per annum. |
ORDINARY SHARES
ORDINARY SHARES | 12 Months Ended |
Dec. 31, 2022 | |
ORDINARY SHARES | |
ORDINARY SHARES | 9. ORDINARY SHARES As of December 31, 2019 and 2020, 500,000,000 ordinary shares with a par value of $0.0001 had been authorized by the Company. Each ordinary share is entitled to one vote. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors of the Company. In 2017, the VIE issued 9,800,000 ordinary shares to William Wei Cao with total consideration of RMB2,150 and 208,955 ordinary shares to Shanghai Guidance Capital Ltd. (“Shanghai Zhaoheng”) and Suzhou Tonghe Venture Investment Partnership II (L.P.) (“Tonghe II”) for a total consideration of RMB200. On January 3, 2019, the VIE repurchased 104,478 shares of ordinary shares held by Shanghai Zhaoheng. As part of the Reorganization in January 2019, the former ordinary shares were exchanged for ordinary shares of the Company on a 1:10 basis. On March 6, 2020, 1,044,776 ordinary shares of the Company was transferred from Tonghe II to OrbiMed Asia Partners III, L.P., King Star Med LP, LAV Granite Limited, LAV Biosciences Fund V, L.P., Victory Treasure Limited and OrbiMed Asia Partners III, L.P. On October 14, 2020, William Cao Wei transferred 5,910,000 ordinary shares of the Company to Michelia Figo Holding Limited with an aggregate consideration of US$1.00 per share. On January 12, 2021, the Company completed its IPO. At the closing of its IPO, the Company issued 11,000,000 American depositary shares (“ADSs”) at public offering price of US$19.00 per ADS. The number of ADSs issued at closing included the exercise in full of the underwriters’ option to purchase 1,650,000 additional ADSs from the Company. The aggregate gross proceeds from the IPO were approximately US$240 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Each ADS represents 5 ordinary shares of the Company. Upon the completion of the IPO, the Company’s then outstanding 31,343,284 Series A Preferred Shares, 21,735,721 Series B-1 Preferred Shares, 59,327,653 Series B-2 Preferred Shares and 61,364,562 Series C Preferred Shares were converted into 31,343,284, 21,735,721, 59,327,653 and 61,364,562 ordinary shares, respectively. As of December 31, 2022, 338,498,819 shares of ordinary shares were issued and outstanding. |
CONVERTIBLE REDEEMABLE PREFERRE
CONVERTIBLE REDEEMABLE PREFERRED SHARES | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |
CONVERTIBLE REDEEMABLE PREFERRED SHARES | 10. CONVERTIBLE REDEEMABLE PREFERRED SHARES On January 12, 2021, the Company completed its IPO. Upon the completion of the IPO, the Company’s then outstanding 31,343,284 Series A Preferred Shares, 21,735,721 Series B-1 Preferred Shares, 59,327,653 Series B-2 Preferred Shares and 61,364,562 Series C Preferred Shares were converted into 31,343,284, 21,735,721, 59,327,653 and 61,364,562 ordinary shares, respectively. The Company’s Preferred Shares activities for the periods presented are summarized below: Mezzanine equity Series A Series B-1 Series B-2 Series C Total RMB RMB RMB RMB RMB Balance as of December 31, 2019 82,334 — 465,509 — 547,843 Issuance of Series B 1 Preferred Shares — 138,695 — — 138,695 Issuance of Series C Preferred Shares — — — 658,265 658,265 Accretion of Series A Preferred Shares to redemption value 28,134 — — — 28,134 Accretion of Series B-1 Preferred Shares to redemption value — 3,786 — — 3,786 Accretion of Series B-2 Preferred Shares to redemption value — — 30,290 — 30,290 Accretion of Series C Preferred Shares to redemption value — — — 523 523 Balance as of December 31, 2020 110,468 142,481 495,799 658,788 1,407,536 Accretion of Series A Preferred Shares to redemption value 867 — — — 867 Accretion of Series B-1 Preferred Shares to redemption value — 302 — — 302 Accretion of Series B-2 Preferred Shares to redemption value — — 733 — 733 Accretion of Series C Preferred Shares to redemption value — — — 87 87 Conversion of preferred shares to ordinary shares upon the IPO (111,335) (142,783) (496,532) (658,875) (1,409,525) Balance as of December 31, 2021 — — — — — On August 8, 2017, the VIE issued 3,656,716 shares of Series A convertible redeemable preferred shares (“Series A Preferred Shares”) to certain investors at US$3.032 per share for a total consideration of US$11,087 (equivalent to approximately RMB69,800). On August 14, 2018, the Company, the VIE and certain investors entered into a convertible loan agreement and a warrant agreement. Prior to the obtaining of requisite overseas direct investment approvals (“ODI approval”), the investors agreed to provide a convertible loan in an aggregate principal amount of US$22,000 (equivalent to approximately RMB138,695) to the VIE, with no interest and acquire warrants to subscribe for a total number of 21,735,721 Series B1 Preferred Shares of the Company at US$1.0122 per share. On January 3, 2019, the VIE repurchased 104,478 shares of ordinary shares and 522,388 shares of Series A Preferred Shares for an aggregate price of US$6,657 (equivalent to approximately RMB44,705). The consideration exceeded the carrying value of repurchased ordinary shares and Series A Preferred Shares by RMB32,840, which was recorded as deemed dividend to the ordinary and preferred shareholders. As part of the Reorganization in January 2019, the former Series A Preferred Shares were exchanged for 31,343,284 Series A Convertible Redeemable Preferred Shares of the Company (“Series A Preferred Shares”) on a 1 On February 22, 2019, the Company issued 59,327,653 shares of Series B-2 convertible redeemable preferred shares (“Series B-2 Preferred Shares”) to certain investors at US$1.0619 per share for total consideration of US$63,000 (equivalent to approximately RMB439,501). Series B-1 Preferred Shares and Series B-2 Preferred Shares are collectively referred to as the Series B Preferred Shares. 10. CONVERTIBLE REDEEMABLE PREFERRED SHARES (CONTINUED) The Group had undergone the Reorganization and changed the issuer of the Series A Preferred Shares to be the reporting entity through share swaps. The major terms and number of shares of the Series A Preferred Shares have remained the same. Thus, there is no accounting impact as a result of the Reorganization at the consolidated level. The Reorganization was a transaction by Group entities under common control. The equity section of the Company after the Reorganization is assumed to have existed from the earliest period presented in the consolidated financial statements. During the period from July 2, 2020 to September 9, 2020, the Company issued 21,735,721 Series B-1 Preferred Shares upon conversion of convertible loan and exercise of the warrants. On October 20, 2020, the Company issued 61,364,562 shares of Series C convertible redeemable preferred shares (“Series C Preferred Shares”) to certain investors at US$ 1.635331 per share for total consideration of US$100,351. The key features of the Series A, Series B and Series C Preferred Shares (collectively the “Preferred Shares”) are as follows: Dividends right Each Preferred Share shall have the right to receive non-cumulative dividends, pari passu with Ordinary Shares, on an as-converted basis, when, as and if declared by the Board. Liquidation preference In the event of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, all assets and funds of the Company legally available for distribution (after satisfaction of all creditors’ claims and claims that may be preferred by law) shall be distributed in the following preference order: (i) Holders of the Series C Preferred Shares shall be entitled to receive a per share amount equal to 100% of the issue price of Series C Preferred Shares, respectively, plus all declared but unpaid dividends and minus all paid dividends. (ii) Holders of the Series B Preferred Shares shall be entitled to receive a per share amount equal to 140% of the issue price of Series B Preferred Shares, respectively, plus all declared but unpaid dividends and minus all paid dividends. (iii) Holders of the Series A Preferred Shares shall be entitled to receive a per share amount equal to 150% of the issue price of Series A Preferred Shares, respectively, plus all declared but unpaid dividends and minus all paid dividends. Conversion right Each Preferred Share may be converted at any time into ordinary shares at the option of the preferred shareholders based on the then-effective conversion price. The initial conversion ratio is 1:1, subject to adjustment in the event of share splits and combinations, ordinary share dividends and distributions, reorganizations, mergers, consolidations, exchanges, substitutions, or dilutive issuance. All Preferred Shares are converted automatically into ordinary shares at the then effective applicable conversion price upon a Qualified Public Offering (public offering of the Company’s shares with an offering price (exclusive of underwriting discounts and registration expenses) that reflects the minimum market capitalization and other conditions set forth in the Company’s articles). 10. CONVERTIBLE REDEEMABLE PREFERRED SHARES (CONTINUED) Redemption right At any time following the first occurrence of any redemption event specified in the shareholders’ agreement (“Redemption Events”), the outstanding preferred shareholders may request a redemption up to all of the outstanding shares held. The Redemption Events shall mean: (i) the Company fails to complete a Qualified Public Offering within five (5) years from October 20, 2020; (ii) any material breach or violation by any Group Company, the Founder or the Founder Holding Company of any of its representations, warranties or covenants contained in the Transaction Documents made to any Investor alone or together with any other Person and such breach or violation is not curable or is not cured within thirty (30) days from the date of occurrence; (iii) the Founder ceases to hold the offices of Chairman and president of the Company or ceases to be in full-time employment by any Group Company in any other capacity within five (5) years from October 20, 2020 unless otherwise approved by the Board (including all Investor Directors); (iv) the exercise of redemption right by any holders with redemption right. The price at which each Preferred Share shall be redeemed equals to: (i) in respect of each Series C Preferred Share, 100% of the original issue price on each preferred share, plus all declared but unpaid dividends on such Series C Preferred Share accrued as of the redemption payment date; and (ii) in respect of each Series B Preferred Share, 140% of the original issue price on each preferred share, plus all declared but unpaid dividends on such Series B Preferred Share accrued as of the redemption payment date; and (iii) in respect of each Series A Preferred Share, 150% of the issue price of Series B-2 Preferred Share on each Series A Preferred, minus all paid dividends on such Series A Preferred Share. After the liquidation amounts of all series of the Preferred Shares have been paid in full, any remaining funds or assets of the Company legally available for distribution to shareholders shall be distributed ratably among the holders of the Preferred Shares, on an as-converted basis, together with the holders of the ordinary shares. 10. CONVERTIBLE REDEEMABLE PREFERRED SHARES (CONTINUED) Accounting of Preferred Shares The Preferred Shares are classified as mezzanine equity in the consolidated balance sheets because they are contingently redeemable upon the occurrence of an event outside of the Company’s control (e.g. the Company not achieving a Qualified Public Offering or a deemed liquidation event before October 20, 2025 (“Target QIPO Date”). The Preferred Shares were determined to be mezzanine equity with no embedded feature to be bifurcated and no beneficial conversion features to be recognized. The Preferred Shares are initially recorded at their respective issuance date fair value, net of issuance cost. The Company incurred issuance cost with amount of RMB13,386 (US$2,000) for the issuance of Series C Preferred Shares. The cumulative undeclared dividends are not recorded in the consolidated balance sheet as the Company does not have the obligation to pay the cumulative dividend before it is declared by the board of directors. The Company concluded that the Preferred Shares are not currently redeemable, but are probable to become redeemable. The Company accreted changes in the redemption value over the period from the date of issuance to the earliest redemption date using the effective interest method. The accretion is recorded against retained earnings, or in the absence of retained earnings, by charges against additional paid-in-capital, or in the absence of additional paid-in-capital, by charges to accumulated deficit. The accretion of the Preferred Shares was RMB 36,802, RMB 62,733 and RMB 1,989 for the years ended December 31, 2019, 2020 and 2021. The convertible loans and warrants were issued contemporaneously and in contemplation of each other. The warrants cannot be separately exercised; hence, they are not freestanding financial instruments. The convertible loans are accounted for as liabilities recorded using amortized cost. Upon the cancellation of convertible loans and exercise of the warrants, the convertible loans were debit with a corresponding entry to credit the issued preferred shares. Modification of Preferred Shares On January 3, 2019, the Target QIPO Date was extended from November 15, 2022 to February 22, 2024 upon issuance of Series B-2 Preferred Shares. The amendment is accounted for as modification rather than extinguishment as the fair values of these Preferred Shares immediately after the amendment were not significantly different from their respective fair values immediately before the amendment. When Preferred Shares are modified and such modification results in value transfer between preferred shareholders and ordinary shareholders, the value transferred is treated as a deemed dividend to or deemed contribution from the preferred shareholders. The change in fair value of Series A Preferred Shares immediately before and after the modification was RMB625. The decrease in fair value of the ordinary shares is RMB625, in substance, a transfer of wealth from the ordinary shareholders to the Series A preferred shareholders. On March 6, 2020, the redemption price of Series A Preferred Shares was amended. Before modification, the redemption price of each share of Series A Preferred Shares equals to 150% of the original issue price on each preferred share, plus the interest at an annual compound rate of eight percent (8%) on the original issue price on each preferred share accrued from August 8, 2017 to the redemption payment date minus all paid dividends on such Series A Preferred Share. The amendment is accounted for as a modification rather than extinguishment as the fair values of these Preferred Shares immediately after the amendment were not significantly different from their respective fair values immediately before the amendment. When Preferred Shares are modified and such modification results in value transfer between preferred shareholders and ordinary shareholders, the value transferred is treated as a deemed dividend to or deemed contribution from the preferred shareholders. The change in fair value of Series A Preferred Shares immediately before and after the modification was RMB9,055. The decrease in fair value of the ordinary shares is RMB9,055, in substance, a transfer of wealth from the ordinary shareholders to the Series A preferred shareholders. 10. CONVERTIBLE REDEEMABLE PREFERRED SHARES (CONTINUED) Modification of Preferred Shares (Continued) On October 20, 2020, the Target QIPO Date was extended from February 22, 2024 to October 20, 2025 upon issuance of Series C Preferred Shares. The amendment is accounted for as a modification rather than extinguishment as the fair values of these Preferred Shares immediately after the amendment were not significantly different from their respective fair values immediately before the amendment. When Preferred Shares are modified and such modification results in value transfer between preferred shareholders and ordinary shareholders, the value transferred is treated as a deemed dividend to or deemed contribution from the preferred shareholders. The change in fair value of Series A, Series B-1 and Series B-2 Preferred Shares immediately before and after the modification was RMB1,284, RMB82 and RMB394, respectively. The increase in fair value of the ordinary shares is RMB1,760, in substance, a transfer of wealth from the preferred shareholders to the ordinary shareholders, respectively. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 11. 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. The share option, to the extent then vested, shall become exercisable only upon the earlier of (i) a listing, or (ii) a sale of all or substantially all of the issued share capital of the Company, or (iii) a sale by the Company of all or substantially all of its assets (but excluding any internal reorganization). 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 will become 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. 11. SHARE-BASED COMPENSATION (CONTINUED) (a) Employee Stock Option Plan (Continued) The following table sets forth the share options activities for the years ended December 31, 2020, 2021 and 2022: 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, 2020 2,757,124 0.55 0.28 1.93 8.67 7,728 Granted 5,198,298 1.65 0.56 3.92 — — Forfeited (545,823) 0.71 0.37 2.56 — — Outstanding at January 1, 2021 7,409,599 1.32 0.47 3.28 8.89 112,024 Granted 6,503,323 1.82 1.74 11.22 — — Forfeited (280,222) 1.47 0.95 6.31 — — Exercised (530,110) 0.51 0.28 1.89 — — Outstanding at January 1, 2022 13,102,590 1.60 1.10 7.21 8.86 12,335 Granted 4,314,826 0.69 0.38 2.52 — — Forfeited (1,384,672) 1.45 1.14 7.52 — — Exercised (164,815) 0.30 0.22 1.47 — — Expired (705,383) 1.20 0.84 5.66 — — Outstanding at December 31, 2022 15,162,546 1.39 0.91 5.98 8.14 1,290 Vested and expected to vest at December 31, 2022 15,162,546 1.39 0.91 5.98 8.14 1,290 Exercisable at December 31, 2022 6,555,655 1.06 0.79 5.24 7.68 1,290 11. SHARE-BASED COMPENSATION (CONTINUED) 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 subjective assumptions, including the expected volatility, the exercise multiple, the risk-free 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 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 year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 Risk-free interest rate 1.6%-2.1% 1.1%-1.8% 1.8%-3.7% Dividend yield 0% 0% 0% Expected volatility range 54.9%-58.1% 52.2%-56.4% 55.6%-57.0% Exercise multiple 2.20-2.80 2.20-2.80 2.20-2.80 Contractual life 10 years 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, no share-based compensation expense was recorded for the year ended December 31, 2020. The Group has recognized RMB36,004 and RMB21,747 share-based compensation expenses relating to options vested for the year ended December 31, 2021 and 2022. Share-based compensation expenses related to options were included in: As of December 31, 2021 2022 RMB RMB US$ (Note 2) Research and development expenses 15,670 10,581 1,534 Administrative expenses 20,334 11,166 1,619 Total 36,004 21,747 3,153 (b) Restricted Shares Units During the year ended December 31, 2021 and 2022, the Company granted 1,494,650 and 479,741 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 December 31, 2022, 1,737,902 RSUs were vested, the Company recognized the share-based compensation expense of RMB 24,380 and RMB Share-based compensation expenses related to RSUs were included in: As of December 31, 2021 2022 RMB RMB US$ (Note 2) Research and development expenses 4,052 644 93 Administrative expenses 20,328 1,711 248 Total 24,380 2,355 341 |
INCOME TAX EXPENSE
INCOME TAX EXPENSE | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAX EXPENSE | |
INCOME TAX EXPENSE | 12. INCOME TAX EXPENSE PRC Effective from January 1, 2008, the PRC’s statutory, Enterprise Income Tax (“EIT”) rate is 25%. According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaged in research and development (“R&D”) activities are entitled to claim an additional tax deduction amounting to 50% of the qualified R&D expenses incurred in determining its tax assessable profits for that year. The additional tax deduction amount of the qualified R&D expenses has been increased from 50% to 75%, effective from 2018, according to a new tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2018 (“Super Deduction”). Cayman Islands Gracell Biotechnologies Inc. is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, Gracell Biotechnologies Inc. is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. British Virgin Islands Gracell BVI is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Gracell BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by Gracell BVI to its shareholders, no British Virgin Islands withholding tax is imposed. United States Gracell Biopharmaceuticals, Inc. is incorporated in U.S. and is subject to U.S. federal corporate income tax at a rate of 21%. Gracell Biopharmaceuticals, Inc. is also subject to state income tax in California of 8.84%. Dividends payable by an U.S. entity, to non-U.S. resident enterprises shall be subject to 30% withholding tax, unless the respective non-U.S. resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with U.S. that provides for a reduced withholding tax rate or an exemption from withholding tax. Hong Kong Gracell HK is incorporated in Hong Kong. Companies registered in Hong Kong are subject to Hong Kong profits tax on the taxable income as reported in their respective statutory financial statements adjusted in accordance with the relevant Hong Kong tax laws. The applicable tax rate in Hong Kong is 16.5%. For the three years ended December 31, 2022, Gracell HK did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earnings in Hong Kong for any of the periods presented. Under the Hong Kong tax law, Gracell HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. 12. INCOME TAX EXPENSE (CONTINUED) Hong Kong (Continued) Reconciliation between the income tax expense computed by applying the statutory tax rate to loss before income tax and the actual provision for income tax is as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Loss before income tax (211,900) (451,754) (607,487) (88,077) Income tax computed at respective applicable tax rate (48,607) (94,531) (138,079) (20,020) Research and development super-deduction (22,121) (44,646) (65,299) (9,467) Non-deductible expenses 100 193 142 21 Changes in valuation allowance 70,628 138,984 203,258 29,469 Income tax expense — — 22 3 Deferred tax assets Deferred taxes were measured using the enacted tax rates for the periods in which the temporary differences are expected to be reversed. The tax effects of temporary differences that give rise to the deferred tax balances as of December 31, 2021 and 2022 are as follows: For the years ended December 31, 2021 2022 RMB RMB US$ (Note 2) Deferred tax assets: Net operating loss carry forward 274,502 441,456 64,005 Capitalized research and development expenses — 21,630 3,136 Accrued expenses — 10,482 1,520 Capitalized Inventory 4,361 5,624 816 Depreciation and amortization of property, equipment and software 2,075 2,430 352 Others 1,843 4,417 640 Gross deferred tax assets 282,781 486,039 70,469 Less: valuation allowance (282,781) (486,039) (70,469) Total deferred tax assets, net — — — Movement of the valuation allowance is as follows: For the years ended December 31, 2020 2021 2022 RMB RMB US$ (Note 2) Balance as of January 1 73,169 143,797 282,781 40,999 Addition 70,628 138,984 203,258 29,470 Balance as of December 31 143,797 282,781 486,039 70,469 A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion or all of the deferred tax assets will not be realized in the foreseeable future. In making such determination, the Group evaluates a variety of positive and negative factors including the Group’s operating history, accumulated deficit, the existence of taxable temporary differences and reversal periods. 12. INCOME TAX EXPENSE (CONTINUED) Deferred tax assets (Continued) 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 December 31, 2021 and 2022. The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2021 and 2022, the Group did not have any significant unrecognized uncertain tax positions. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
NET LOSS PER SHARE | |
NET LOSS PER SHARE | 13. NET LOSS PER SHARE Basic and diluted net loss per share for the years ended December 31, 2020, 2021 and 2022 are calculated as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Numerator: Net loss attributable to Gracell Biotechnologies Inc.’s shareholders (211,900) (451,754) (607,509) (88,080) Accretion of convertible redeemable preferred shares to redemption value (62,733) (1,989) — — Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders (274,633) (453,743) (607,509) (88,080) Denominator: Weighted-average number of ordinary shares outstanding—basic and diluted 99,044,776 328,866,599 338,342,051 338,342,051 Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders—basic and diluted (2.77) (1.38) (1.80) (0.26) For the year ended December 31, 2020, assumed conversion of the Preferred Shares has not been reflected in the dilutive calculations pursuant to ASC 260, “Earnings Per Share,” due to the anti-dilutive effect. For the year ended December 31, 2020, the Company also has certain share options, which cannot be exercised until the Company completes IPO, that are not included in the computation of diluted losses per shares as such contingent event had not taken place. 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 years ended December 31, 2020 2021 2022 shares shares shares Convertible redeemable preferred shares 110,230,842 — — Share options and RSUs — 930,498 2,851,075 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 14. 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 the Founder b) The Group had the following related party transactions: For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Payment for professional service fee Unitex Capital Ltd (a) 2,631 3,354 10,885 1,578 Note (a): For the years ended December 31, 2020, 2021 and 2022, the Group incurred professional service fees to Unitex Capital Ltd, in the amount of RMB 2,631 , RMB 3,354 and RMB 10,885 respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 15. 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. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 16. RESTRICTED NET ASSETS The Group’s ability to pay dividends may depend on the Group receiving distributions of funds from its PRC subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Group’s PRC subsidiaries only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Group’s PRC subsidiaries. In accordance with the Company law of the PRC, a domestic enterprise is required to provide statutory reserves of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to provide discretionary surplus reserve, at the discretion of the Board of Directors, from the profits determined in accordance with the enterprise’s PRC statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The Group’s PRC subsidiaries were established as domestic invested enterprise and therefore is subject to the above-mentioned restrictions on distributable profits. As a result of these PRC laws and regulations subject to the limit discussed above that require annual appropriations of 10% of after-tax income to be set aside, prior to payment of dividends, as general reserve fund, the Group’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Group. Foreign exchange and other regulations in the PRC further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of dividends, loans and advances. 16. RESTRICTED NET ASSETS (CONTINUED) As of December 31, 2022, the total restricted net assets of the Company’s subsidiaries and the VIE incorporated in the PRC and subjected to restriction amounted to approximately RMB 91,626. Rules 12-04(a) and 4-08(e)(3) of Regulation S-X require condensed financial information as to the financial position, cash flows and results of operations of a parent company to be presented for the same periods for which the audited consolidated financial statements have been presented when the restricted net assets of the consolidated subsidiaries together exceed 25% of consolidated net assets as of the end of the most recently completed fiscal year. The Group performed a test on the restricted net assets of consolidated subsidiaries in accordance S-X Rule4-08 (e)(3) and concluded that the restricted net assets of the consolidated subsidiaries did not exceed 25% of the consolidated net assets as of December 31, 2022. Therefore, it was not applicable for the Group to present the condensed financial information of the parent company. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS The Group evaluated subsequent events through April 25, 2023, the date these consolidated financial statements were issued. In March 2023, the Group entered into a License Agreement with Seagen Inc., or Seagen, pursuant to which the Group received from Seagen a worldwide license to certain patent rights that Seagen owns. Under this license agreement with Seagen, each license is non-exclusive and sublicensable, subject to certain conditions. As of the date these consolidated financial statements were issued, the Group has made a nonrefundable seven figure US dollar payment of upfront fee to Seagen and are subject up to a total of approximately US$45 million of nonrefundable payments to Seagen. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The accompany consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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 year ended December 31, 2022 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB6.8972, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2022. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2022, or at any other rate. The US$ convenience translation is not required under U.S. GAAP. |
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. |
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 years ended December 31, 2020, 2021 and 2022. |
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 years ended December 31, 2020, 2021 and 2022, no specific subsidies were received by the Group. Other subsidies of RMB 4,707, RMB 9,120 and RMB8,001 for the years ended December 31, 2020, 2021 and 2022 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. The Group had no finance leases for the years ended December 31, 2021 and 2022. 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. The Group, as an emerging growth company, elected to early adopt the standard for annual reporting period beginning January 1, 2021, utilizing the modified retrospective transition method. The Group has recorded lease assets and liabilities of approximately RMB 24.5 million on its consolidated balance sheet on January 1, 2021, with no material impact to its consolidated statements of comprehensive loss and consolidated statements of cash flows. After the initial adoption of ASC 842 on January 1, 2021, lease liability is measured at the present value of future base rent over the remaining lease terms discounted at 5%, which represents the incremental borrowing rate on January 1, 2021 for a 72 months loan term in China. ROU asset is measured as the initially recognized ROU asset less the difference between (a) cumulative straight-line expense recognized after January 1, 2021 and (b) cumulative accretion of the lease liability under the effective interest rate method after January 1, 2021. As of December 31, 2021 and 2022, the Company had operating lease ROU assets of RMB 29.7 million and RMB 21.5 million respectively, and operating lease liabilities of RMB 32.4 million and RMB 24.0 million respectively. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income (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 income (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 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 |
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. The Company early adopted Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, from the earliest period presented to recognize the effect of forfeiture in compensation cost when they occur. |
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 RMB 4.29 million, RMB 15.74 million and RMB 20.59 million for the years ended December 31, 2020, 2021 and 2022, respectively. |
Concentration of risks | Concentration of risks Concentration of credit risk As of December 31, 2021 and 2022, the aggregate amount of cash and cash equivalents and short-term investments of RMB 1,822,364 and RMB 1,403,024 respectively, were held at major financial institutions located in the mainland of China, and RMB 10,257 and RMB 55,180, 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 depreciation of approximately 2.5% and appreciation of 9.2% in the years ended December 31, 2021 and 2022, respectively. 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies the accounting for income taxes as part of the FASB’s overall initiative to reduce complexity in accounting standards. The amendments include removal of certain exceptions to the general principles of ASC 740, Income taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. The update is effective for annual periods beginning after December 15, 2021. Certain amendments in this update should be applied retrospectively or modified retrospectively, all other amendments should be applied prospectively. The Group has adopted ASU 2019-12 and the impact of this adoption was assessed to be not material. New and amended standards not yet 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, 2023, including interim periods within fiscal years beginning after December 15, 2023 for the Group. The Group does not plan to early adopt ASU 2016-13 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) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Summary of Variable Interest Entities and Subsidiaries | As of December 31, 2022, the Company’s principal subsidiaries 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 its Subsidiaries | The following financial information of the Group’s VIE and the VIE’s subsidiary as of December 31, 2021 and 2022 and for each of the three years in the period ended December 31, 2022 is included in the accompanying consolidated financial statements of the Group as follows: As of December 31, 2021 2022 RMB RMB US$ (Note 2) ASSETS Current assets: Cash and cash equivalents 122,220 110,479 16,018 Short-term investments 3,615 3,559 516 Amounts due from related parties 65,705 93,705 13,586 Prepayments and other current assets 40,968 20,675 2,998 Total current assets 232,508 228,418 33,118 Property, equipment and software 60,944 44,742 6,487 Operating lease, right-of-use assets 4,827 7,911 1,147 Other non-current assets 7,983 2,746 398 TOTAL ASSETS 306,262 283,817 41,150 LIABILITIES Current liabilities: Amounts due to related parties 486,794 676,174 98,036 Accruals and other current liabilities 35,685 41,425 6,006 Short-term borrowings 66,100 104,600 15,166 Operating lease liabilities, current 4,367 4,998 725 Current portion of long-term borrowings 2,376 7,844 1,137 Total current liabilities 595,322 835,041 121,070 Amounts due to related parties 59,500 59,500 8,627 Long-term borrowings 54,349 46,505 6,742 Operating lease liabilities, non-current 730 4,436 643 TOTAL LIABILITIES 709,901 945,482 137,082 For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Total revenue from related parties 16,906 16,226 26,415 3,830 Net loss (100,195) (225,650) (263,157) (38,154) For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Net cash used in operating activities (84,862) (166,777) (210,598) (30,534) Net cash used in investing activities (68,628) (2,730) (9,055) (1,313) Net cash generated from financing activities 161,086 241,978 207,912 30,144 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of Property Plant and Equipment Useful Lives | 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 |
PREPAYMENTS AND OTHER CURRENT_2
PREPAYMENTS AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
Summary of Prepayments And Other Current Assets | As of December 31, 2021 2022 RMB RMB US$ (Note 2) Deductible value-added tax input 40,690 26,330 3,817 Prepayments for CRO and other services 4,614 5,296 768 Deposits 4,083 3,355 486 Deferred expenses 531 408 59 Prepayment for raw materials 2,335 1,448 210 Others 206 714 103 52,459 37,551 5,443 |
PROPERTY, EQUIPMENT AND SOFTW_2
PROPERTY, EQUIPMENT AND SOFTWARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY, EQUIPMENT AND SOFTWARE | |
Summary of Property Equipment And Software | As of December 31, 2021 2022 RMB RMB US$ (Note 2) Machinery and laboratory equipment 100,693 138,049 20,015 Leasehold improvements 85,177 101,048 14,651 Computer Software 2,809 10,417 1,510 Construction in Progress 5,149 283 41 Others 4,785 6,890 999 Total property, equipment and software 198,613 256,687 37,216 Less: accumulated depreciation and amortization (74,795) (133,561) (19,364) Property, equipment and software, net 123,818 123,126 17,852 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Summary of Operating Leases | Information related to operating leases as of December 31, 2021 and 2022 is as follows. As of December 31, 2021 2022 RMB RMB US$ (Note 2) Assets Operating lease right-of-use assets 29,652 21,546 3,124 Liabilities Operating lease liabilities, current 17,527 17,545 2,544 Operating lease liabilities, non-current 14,830 6,485 940 32,357 24,030 3,484 |
Summary of Future Minimum Payment Operating Leases | Future minimum payments under non-cancelable operating leases with initial terms in excess of one year consist of the following as of December 31, 2022: RMB US$ (Note 2) For the years ending: 2023 18,151 2,632 2024 5,029 729 2025 1,623 235 2026 — — 2027 and thereafter — — Total undiscounted lease payments 24,803 3,596 Less: imputed interest (773) (112) Total lease liabilities 24,030 3,484 |
Summary of Lease Cost and Other Information | The below table summarizes lease costs and other information for the year ended December 31, 2022: As of December 31, 2022 RMB US$ Lease costs (Note 2) Operating lease cost 18,742 2,717 Short-term lease cost 1,580 229 Total lease cost 20,322 2,946 Other information Cash paid for amounts included in the measurement of lease liabilities 18,963 2,749 Right-of-use assets obtained in exchange for new operating lease liabilities 9,345 1,355 Weighted-average remaining lease term 1.13 years 1.13 years Weighted-average discount rate 5.0 % 5.0 % |
OTHER NON-CURRENT ASSETS (Table
OTHER NON-CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER NON-CURRENT ASSETS | |
Summary of Other Non-current Assets | Other non-current assets consist of the following: As of December 31, 2021 2022 RMB RMB US$ (Note 2) Prepayment for property, equipment and software 19,968 10,282 1,491 Long-term deposit 1,619 2,430 352 Others — 3,137 455 21,587 15,849 2,298 |
ACCRUALS AND OTHER CURRENT LI_2
ACCRUALS AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUALS AND OTHER CURRENT LIABILITIES | |
Summary of Accruals And Other Current Liabilities Payable | Accruals and other current liabilities consist of the following: As of December 31, 2021 2022 RMB RMB US$ (Note 2) Accrued external research and development related expenses 36,389 47,073 6,825 Salary and welfare payables 20,909 20,622 2,990 Professional service fees 5,161 10,252 1,486 Deferred income for reimbursement of the expenses related to the establishment of the ADS facility 2,902 2,902 421 Others 3,759 5,142 745 69,120 85,991 12,467 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BORROWINGS | |
Schedule of Borrowings | As of December 31, 2021 2022 RMB RMB US$ (Note 2) Current Short-term borrowings: Bank loans 66,100 104,600 15,166 Current portion of long-term borrowings 2,376 7,844 1,137 Total current borrowings 68,476 112,444 16,303 Non-Current Long-term borrowings: Bank loans 54,349 46,505 6,743 Total non-current borrowings 54,349 46,505 6,743 Total borrowings 122,825 158,949 23,046 |
CONVERTIBLE REDEEMABLE PREFER_2
CONVERTIBLE REDEEMABLE PREFERRED SHARES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |
Schedule of Preferred Shares activities | Mezzanine equity Series A Series B-1 Series B-2 Series C Total RMB RMB RMB RMB RMB Balance as of December 31, 2019 82,334 — 465,509 — 547,843 Issuance of Series B 1 Preferred Shares — 138,695 — — 138,695 Issuance of Series C Preferred Shares — — — 658,265 658,265 Accretion of Series A Preferred Shares to redemption value 28,134 — — — 28,134 Accretion of Series B-1 Preferred Shares to redemption value — 3,786 — — 3,786 Accretion of Series B-2 Preferred Shares to redemption value — — 30,290 — 30,290 Accretion of Series C Preferred Shares to redemption value — — — 523 523 Balance as of December 31, 2020 110,468 142,481 495,799 658,788 1,407,536 Accretion of Series A Preferred Shares to redemption value 867 — — — 867 Accretion of Series B-1 Preferred Shares to redemption value — 302 — — 302 Accretion of Series B-2 Preferred Shares to redemption value — — 733 — 733 Accretion of Series C Preferred Shares to redemption value — — — 87 87 Conversion of preferred shares to ordinary shares upon the IPO (111,335) (142,783) (496,532) (658,875) (1,409,525) Balance as of December 31, 2021 — — — — — |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
Summary of the option activities | The following table sets forth the share options activities for the years ended December 31, 2020, 2021 and 2022: 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, 2020 2,757,124 0.55 0.28 1.93 8.67 7,728 Granted 5,198,298 1.65 0.56 3.92 — — Forfeited (545,823) 0.71 0.37 2.56 — — Outstanding at January 1, 2021 7,409,599 1.32 0.47 3.28 8.89 112,024 Granted 6,503,323 1.82 1.74 11.22 — — Forfeited (280,222) 1.47 0.95 6.31 — — Exercised (530,110) 0.51 0.28 1.89 — — Outstanding at January 1, 2022 13,102,590 1.60 1.10 7.21 8.86 12,335 Granted 4,314,826 0.69 0.38 2.52 — — Forfeited (1,384,672) 1.45 1.14 7.52 — — Exercised (164,815) 0.30 0.22 1.47 — — Expired (705,383) 1.20 0.84 5.66 — — Outstanding at December 31, 2022 15,162,546 1.39 0.91 5.98 8.14 1,290 Vested and expected to vest at December 31, 2022 15,162,546 1.39 0.91 5.98 8.14 1,290 Exercisable at December 31, 2022 6,555,655 1.06 0.79 5.24 7.68 1,290 |
Summary of the assumptions used to estimate the fair value of the share options | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 Risk-free interest rate 1.6%-2.1% 1.1%-1.8% 1.8%-3.7% Dividend yield 0% 0% 0% Expected volatility range 54.9%-58.1% 52.2%-56.4% 55.6%-57.0% Exercise multiple 2.20-2.80 2.20-2.80 2.20-2.80 Contractual life 10 years 10 years 10 years |
Options | |
SHARE-BASED COMPENSATION | |
Summary of share-based compensation expenses | As of December 31, 2021 2022 RMB RMB US$ (Note 2) Research and development expenses 15,670 10,581 1,534 Administrative expenses 20,334 11,166 1,619 Total 36,004 21,747 3,153 |
Restricted Stock Units (RSUs) | |
SHARE-BASED COMPENSATION | |
Summary of share-based compensation expenses | As of December 31, 2021 2022 RMB RMB US$ (Note 2) Research and development expenses 4,052 644 93 Administrative expenses 20,328 1,711 248 Total 24,380 2,355 341 |
INCOME TAX EXPENSE (Tables)
INCOME TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAX EXPENSE | |
Summary of effective income tax rate reconciliation | For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Loss before income tax (211,900) (451,754) (607,487) (88,077) Income tax computed at respective applicable tax rate (48,607) (94,531) (138,079) (20,020) Research and development super-deduction (22,121) (44,646) (65,299) (9,467) Non-deductible expenses 100 193 142 21 Changes in valuation allowance 70,628 138,984 203,258 29,469 Income tax expense — — 22 3 |
Summary of deferred tax assets and liabilities | For the years ended December 31, 2021 2022 RMB RMB US$ (Note 2) Deferred tax assets: Net operating loss carry forward 274,502 441,456 64,005 Capitalized research and development expenses — 21,630 3,136 Accrued expenses — 10,482 1,520 Capitalized Inventory 4,361 5,624 816 Depreciation and amortization of property, equipment and software 2,075 2,430 352 Others 1,843 4,417 640 Gross deferred tax assets 282,781 486,039 70,469 Less: valuation allowance (282,781) (486,039) (70,469) Total deferred tax assets, net — — — |
Summary of valuation allowance | For the years ended December 31, 2020 2021 2022 RMB RMB US$ (Note 2) Balance as of January 1 73,169 143,797 282,781 40,999 Addition 70,628 138,984 203,258 29,470 Balance as of December 31 143,797 282,781 486,039 70,469 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NET LOSS PER SHARE | |
Summary of basic and diluted net loss per share | Basic and diluted net loss per share for the years ended December 31, 2020, 2021 and 2022 are calculated as follows: For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Numerator: Net loss attributable to Gracell Biotechnologies Inc.’s shareholders (211,900) (451,754) (607,509) (88,080) Accretion of convertible redeemable preferred shares to redemption value (62,733) (1,989) — — Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders (274,633) (453,743) (607,509) (88,080) Denominator: Weighted-average number of ordinary shares outstanding—basic and diluted 99,044,776 328,866,599 338,342,051 338,342,051 Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders—basic and diluted (2.77) (1.38) (1.80) (0.26) |
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 years ended December 31, 2020 2021 2022 shares shares shares Convertible redeemable preferred shares 110,230,842 — — Share options and RSUs — 930,498 2,851,075 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
Summary of related party transactions | For the years ended December 31, 2020 2021 2022 RMB RMB RMB US$ (Note 2) Payment for professional service fee Unitex Capital Ltd (a) 2,631 3,354 10,885 1,578 |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION - Summary of Variable Interest Entities and Subsidiaries (Details) | 12 Months Ended |
Dec. 31, 2022 | |
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 | 12 Months Ended | |||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | Jan. 01, 2021 CNY (¥) | |
Current assets: | ||||||
Cash and cash equivalents | ¥ 1,454,645 | ¥ 1,829,006 | $ 210,904 | |||
Prepayments and other current assets | 37,551 | 52,459 | 5,443 | |||
Total current assets | 1,495,755 | 1,885,080 | 216,863 | |||
Property, equipment and software | 123,126 | 123,818 | 17,852 | |||
Operating lease, right-of-use assets | 21,546 | 29,652 | 3,124 | ¥ 24,500 | ||
Other non-current assets | 15,849 | 21,587 | 2,298 | |||
TOTAL ASSETS | 1,656,276 | 2,060,137 | 240,137 | |||
Current liabilities: | ||||||
Amounts due to a related party | 4,662 | 676 | ||||
Short-term borrowings | 104,600 | 66,100 | 15,166 | |||
Operating lease liabilities, current | 17,545 | 17,527 | 2,544 | |||
Current portion of long-term borrowings | 7,844 | 2,376 | 1,137 | |||
Total current liabilities | 220,642 | 155,123 | 31,990 | |||
Long-term borrowings | 46,505 | 54,349 | 6,743 | |||
Operating lease liabilities, non-current | 6,485 | 14,830 | 940 | |||
TOTAL LIABILITIES | 280,511 | 232,766 | 40,670 | |||
Net loss | (607,509) | $ (88,080) | (453,743) | ¥ (274,633) | ||
Net cash used in operating activities | (482,648) | (69,978) | (304,550) | (198,149) | ||
Net cash used in investing activities | (48,332) | (7,008) | (41,616) | (93,941) | ||
Net cash generated from financing activities | 33,324 | 4,832 | 1,456,185 | 756,467 | ||
Variable Interest Entities And Its Subsidiaries | ||||||
Current assets: | ||||||
Cash and cash equivalents | 110,479 | 122,220 | 16,018 | |||
Short-term investments | 3,559 | 3,615 | 516 | |||
Amounts due from related parties | 93,705 | 65,705 | 13,586 | |||
Prepayments and other current assets | 20,675 | 40,968 | 2,998 | |||
Total current assets | 228,418 | 232,508 | 33,118 | |||
Property, equipment and software | 44,742 | 60,944 | 6,487 | |||
Operating lease, right-of-use assets | 7,911 | 4,827 | 1,147 | |||
Other non-current assets | 2,746 | 7,983 | 398 | |||
TOTAL ASSETS | 283,817 | 306,262 | 41,150 | |||
Current liabilities: | ||||||
Amounts due to a related party | 676,174 | 486,794 | 98,036 | |||
Accruals and other current liabilities | 41,425 | 35,685 | 6,006 | |||
Short-term borrowings | 104,600 | 66,100 | 15,166 | |||
Operating lease liabilities, current | 4,998 | 4,367 | 725 | |||
Current portion of long-term borrowings | 7,844 | 2,376 | 1,137 | |||
Total current liabilities | 835,041 | 595,322 | 121,070 | |||
Amounts due to related parties | 59,500 | 59,500 | 8,627 | |||
Long-term borrowings | 46,505 | 54,349 | 6,742 | |||
Operating lease liabilities, non-current | 4,436 | 730 | 643 | |||
TOTAL LIABILITIES | 945,482 | 709,901 | $ 137,082 | |||
Total revenue from related parties | 26,415 | 3,830 | 16,226 | 16,906 | ||
Net loss | (263,157) | (38,154) | (225,650) | (100,195) | ||
Net cash used in operating activities | (210,598) | (30,534) | (166,777) | (84,862) | ||
Net cash used in investing activities | (9,055) | (1,313) | (2,730) | (68,628) | ||
Net cash generated from financing activities | ¥ 207,912 | $ 30,144 | ¥ 241,978 | ¥ 161,086 |
ORGANIZATION AND BASIS OF PRE_5
ORGANIZATION AND BASIS OF PRESENTATION - Additional Information (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
WFOE | Variable Interest Entity, Primary Beneficiary | |||
ORGANIZATION AND BASIS OF PRESENTATION | |||
Revenue from related parties | ¥ 26.4 | ¥ 16.2 | ¥ 16.9 |
Administrative expense | 16.6 | 23 | 0 |
Loans received | 0 | 29.6 | 6.9 |
Loans received from related party | ¥ 171.8 | ¥ 192.5 | ¥ 190 |
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 - Additional Information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Jan. 01, 2021 CNY (¥) | Dec. 31, 2022 CNY (¥) segment | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Closing foreign exchange rate | 6.8972 | 6.8972 | |||
Number of operating segment | segment | 1 | ||||
Number of reportable segment | segment | 1 | ||||
Specific subsidies | ¥ 0 | ¥ 0 | ¥ 0 | ||
Impairment of long lived assets held for sale | 0 | 0 | 0 | ||
Assets under capital leases net of accumulated amortization | ¥ 0 | 0 | |||
Percentage of tax benefits to be realized to be eligible for recognition | 50% | ||||
Defined contribution plan expenses | ¥ 20,590 | ¥ 15,740 | 4,290 | ||
Percentage appreciation in the foreign currency | 9.20% | 2.50% | |||
Operating lease discount rate | 5% | ||||
Operating lease right-of-use assets | ¥ 24,500 | ¥ 21,546 | ¥ 29,652 | $ 3,124 | |
Operating lease liability | 24,030 | 32,357 | $ 3,484 | ||
Other subsidiary | 8,001 | 9,120 | ¥ 4,707 | ||
CHINA | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Cash and cash equivalents and short term investments | 1,403,024 | 1,822,364 | |||
Debt instrument term | 72 months | ||||
Outside China | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Cash and cash equivalents and short term investments | ¥ 55,180 | ¥ 10,257 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Property Plant and Equipment Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Machinery and laboratory equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Machinery and laboratory equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 4 years |
Furniture and tools | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Furniture and tools | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Electronic equipment | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Computer software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Computer software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
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 | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
PREPAYMENTS AND OTHER CURRENT ASSETS | |||
Deductible value-added tax input | ¥ 26,330 | $ 3,817 | ¥ 40,690 |
Prepayments for CRO and other services | 5,296 | 768 | 4,614 |
Deposits | 3,355 | 486 | 4,083 |
Deferred expenses | 408 | 59 | 531 |
Prepayment for raw materials | 1,448 | 210 | 2,335 |
Others | 714 | 103 | 206 |
Prepaid expense and other assets current | ¥ 37,551 | $ 5,443 | ¥ 52,459 |
PROPERTY, EQUIPMENT AND SOFTW_3
PROPERTY, EQUIPMENT AND SOFTWARE - Summary of Property Equipment And Software (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | ¥ 256,687 | $ 37,216 | ¥ 198,613 |
Less: accumulated depreciation and amortization | (133,561) | (19,364) | (74,795) |
Property, equipment and software, net | 123,126 | 17,852 | 123,818 |
Machinery and laboratory equipment | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 138,049 | 20,015 | 100,693 |
Leasehold improvements | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 101,048 | 14,651 | 85,177 |
Computer software | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 10,417 | 1,510 | 2,809 |
Construction in Progress | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 283 | 41 | 5,149 |
Vehicles | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | ¥ 6,890 | $ 999 | ¥ 4,785 |
PROPERTY, EQUIPMENT AND SOFTW_4
PROPERTY, EQUIPMENT AND SOFTWARE - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Depreciation and amortization expenses | ¥ 58,766 | ¥ 44,870 | ¥ 21,589 |
LEASES - Summary of Operating L
LEASES - Summary of Operating Leases (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Jan. 01, 2021 CNY (¥) |
Assets | ||||
Operating lease right-of-use assets | ¥ 21,546 | $ 3,124 | ¥ 29,652 | ¥ 24,500 |
Liabilities | ||||
Operating lease liabilities, current | 17,545 | 2,544 | 17,527 | |
Operating lease liabilities, non-current | 6,485 | 940 | 14,830 | |
Total lease liabilities | ¥ 24,030 | $ 3,484 | ¥ 32,357 |
LEASES - Summary of Future Mini
LEASES - Summary of Future Minimum Payment Operating Leases (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | |
LEASES | |||
2023 | ¥ 18,151 | $ 2,632 | |
2024 | 5,029 | 729 | |
2025 | 1,623 | 235 | |
2026 | 0 | 0 | |
2027 and thereafter | 0 | 0 | |
Total undiscounted lease payments | 24,803 | 3,596 | |
Less: imputed interest | (773) | (112) | |
Total lease liabilities | 24,030 | ¥ 32,357 | $ 3,484 |
Operating lease expense | ¥ 18,742 | ¥ 16,338 |
LEASES - Summary of Lease Cost
LEASES - Summary of Lease Cost and Other Information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | |
Lease costs | ||
Operating lease cost | ¥ 18,742 | $ 2,717 |
Short-term lease cost | 1,580 | 229 |
Total lease cost | 20,322 | 2,946 |
Cash paid for amounts included in the measurement of lease liabilities | 18,963 | 2,749 |
Right-of-use assets obtained in exchange for new operating lease liabilities | ¥ 9,345 | $ 1,355 |
Weighted-average remaining lease term | 1 year 1 month 17 days | 1 year 1 month 17 days |
Weighted-average discount rate | 5% | 5% |
LEASES - Additional Information
LEASES - Additional Information (Details) - 12 months ended Dec. 31, 2022 ¥ in Thousands, $ in Thousands | CNY (¥) | USD ($) |
LEASES | ||
Total operating lease cost | ¥ 18,742 | $ 2,717 |
Variable lease cost | ¥ 0 |
OTHER NON-CURRENT ASSETS - Summ
OTHER NON-CURRENT ASSETS - Summary of Other Non-current Assets (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
OTHER NON-CURRENT ASSETS | |||
Prepayment for property, equipment and software | ¥ 10,282 | $ 1,491 | ¥ 19,968 |
Long-term deposit | 2,430 | 352 | 1,619 |
Others | 3,137 | 455 | 0 |
Total other non-current assets | ¥ 15,849 | $ 2,298 | ¥ 21,587 |
ACCRUALS AND OTHER CURRENT LI_3
ACCRUALS AND OTHER CURRENT LIABILITIES - Summary of Accruals And Other Current Liabilities Payable (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
ACCRUALS AND OTHER CURRENT LIABILITIES | |||
Accrued external research and development related expenses | ¥ 47,073 | $ 6,825 | ¥ 36,389 |
Salary and welfare payables | 20,622 | 2,990 | 20,909 |
Professional service fees | 10,252 | 1,486 | 5,161 |
Deferred income for reimbursement of the expenses related to the establishment of the ADS facility | 2,902 | 421 | 2,902 |
Others | 5,142 | 745 | 3,759 |
Accrued liabilities and other liabilities | ¥ 85,991 | $ 12,467 | ¥ 69,120 |
BORROWINGS - Schedule of Borrow
BORROWINGS - Schedule of Borrowings (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Short-term borrowings: | |||
Bank loans | ¥ 104,600 | $ 15,166 | ¥ 66,100 |
Current portion of long-term borrowings | 7,844 | 1,137 | 2,376 |
Total current borrowings | 112,444 | 16,303 | 68,476 |
Long-term borrowings: | |||
Bank loans | 46,505 | 6,743 | 54,349 |
Total non-current borrowings | 46,505 | 6,743 | 54,349 |
Total borrowings | ¥ 158,949 | $ 23,046 | ¥ 122,825 |
BORROWINGS - Additional Informa
BORROWINGS - Additional Information (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||||||||
Dec. 31, 2022 CNY (¥) | Aug. 31, 2022 CNY (¥) loan | Jun. 30, 2022 CNY (¥) loan | Mar. 31, 2022 CNY (¥) loan | Nov. 30, 2021 CNY (¥) loan | Oct. 31, 2021 CNY (¥) loan | Mar. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Sep. 30, 2020 CNY (¥) | Jul. 31, 2020 CNY (¥) | May 31, 2020 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Nov. 30, 2022 | Jun. 30, 2020 CNY (¥) | Jan. 31, 2020 CNY (¥) | |
BORROWINGS | ||||||||||||||||||
Proceeds from short term bank loan | ¥ 104,600 | $ 15,166 | ¥ 71,233 | ¥ 103,008 | ||||||||||||||
Bank Of China | Term loan | Maximum | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Short term debt effective rate of interest | 5% | 5% | ||||||||||||||||
Bank Of China | Term loan | Minimum | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Short term debt effective rate of interest | 4.85% | 4.85% | ||||||||||||||||
Bank Of China | Term Loan Facility Two | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Long term debt instrument term | 60 months | 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 | 72 months | ||||||||||||||||
Long term line of credit aggregate amount drawn | ¥ 44,280 | ¥ 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 | 13,870 | ||||||||||||||||
Long term line of credit aggregate amount repaid | 3,800 | ¥ 3,800 | ||||||||||||||||
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% | |||||||||||||||||
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% | 3.80% | ||||||||||||||||
China CITIC Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Short term loan period | 12 months | 12 months | ||||||||||||||||
Debt instrument face value | ¥ 20,000 | ¥ 10,000 | ||||||||||||||||
Short term debt effective rate of interest | 3.80% | |||||||||||||||||
China CITIC Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | One-year loan prime rate | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Debt instrument variable interest rate spread | 0.15% | |||||||||||||||||
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 | ¥ 15,000 | ¥ 20,000 | ¥ 20,000 | ¥ 10,000 | ||||||||||||||
Short term debt effective rate of interest | 3.76% | 4.35% | 4.35% | 4.35% | ||||||||||||||
Number of loan agreements | loan | 2 | 2 | 2 | 2 | ||||||||||||||
Hangzhou Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | Term Loan Facility Two | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Short term loan period | 12 months | 12 months | ||||||||||||||||
Short Term Loan Agreement One | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Proceeds from short term bank loan | ¥ 6,100 | |||||||||||||||||
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% | 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 Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Proceeds from short term bank loan | ¥ 5,000 | |||||||||||||||||
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 Agreement Four | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Proceeds from short term bank loan | ¥ 5,000 | |||||||||||||||||
Short Term Loan Agreement Five | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Debt instrument face value | ¥ 5,000 | |||||||||||||||||
Short Term Loan Agreement Six | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Proceeds from short term bank loan | ¥ 5,000 | |||||||||||||||||
Short term loan period | 12 months | |||||||||||||||||
Short Term Loan Agreement Six | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | One-year loan prime rate | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Debt instrument variable interest rate spread | 0.45% | |||||||||||||||||
Short Term Loan Agreements | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | Maximum | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Short term debt effective rate of interest | 4.35% | 4.35% | ||||||||||||||||
Short Term Loan Agreements | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | Minimum | ||||||||||||||||||
BORROWINGS | ||||||||||||||||||
Short term debt effective rate of interest | 3.65% | 3.65% | ||||||||||||||||
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% | |||||||||||||||||
Number of loan agreements | loan | 3 | 3 |
ORDINARY SHARES - (Details)
ORDINARY SHARES - (Details) $ / shares in Units, ¥ in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||
Jan. 12, 2021 USD ($) $ / shares shares | Jan. 03, 2019 shares | Jan. 31, 2019 | Dec. 31, 2022 Vote $ / shares shares | Dec. 31, 2017 CNY (¥) shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 $ / shares shares | Oct. 14, 2020 $ / shares shares | Mar. 06, 2020 shares | Dec. 31, 2019 $ / shares shares | |
ORDINARY SHARES | ||||||||||
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | ||||||
Ordinary shares, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Number of votes per share | Vote | 1 | |||||||||
Ordinary shares, shares issued | 338,498,819 | 337,969,926 | ||||||||
Ordinary shares, shares outstanding | 338,498,819 | 337,969,926 | ||||||||
Stockholders equity split | 1:10 | |||||||||
American depositary shares | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, par value | $ / shares | $ 19 | |||||||||
Ordinary shares, shares issued | 11,000,000 | |||||||||
Number of additional shares issued | 1,650,000 | |||||||||
Proceeds from Issuance initial public offering | $ | $ 240 | |||||||||
Entity listing depository ratio | 5 | |||||||||
Series A Preferred Stock | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, shares outstanding | 31,343,284 | |||||||||
Preferred shares, shares outstanding | 31,343,284 | |||||||||
Series B One Preferred Stock | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, shares outstanding | 21,735,721 | |||||||||
Preferred shares, shares outstanding | 21,735,721 | |||||||||
Series B Two Preferred Stock | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, shares outstanding | 59,327,653 | |||||||||
Preferred shares, shares outstanding | 59,327,653 | |||||||||
Series C Preferred Stock | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, shares outstanding | 61,364,562 | |||||||||
Preferred shares, shares outstanding | 61,364,562 | |||||||||
William Wei Cao | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, shares issued | 9,800,000 | |||||||||
Proceeds from ordinary shares issued | ¥ | ¥ 2,150 | |||||||||
Shanghai Guidance Capital Ltd And Suzhou Tonghe Venture Investment Partnership II | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares, shares issued | 208,955 | |||||||||
Proceeds from ordinary shares issued | ¥ | ¥ 200 | |||||||||
Shanghai Guidance Capital Ltd | ||||||||||
ORDINARY SHARES | ||||||||||
Stock repurchased during period | 104,478 | |||||||||
OrbiMed Asia Partners III LP King Star Med LP LAV Granite Limited LAV Biosciences Fund V LP Victory Treasure Limited and OrbiMed Asia Partners III LP | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares transferred | 1,044,776 | |||||||||
Michelia Figo Holding Limited | ||||||||||
ORDINARY SHARES | ||||||||||
Ordinary shares transferred | 5,910,000 | |||||||||
Aggregate consideration per share | $ / shares | $ 1 |
CONVERTIBLE REDEEMABLE PREFER_3
CONVERTIBLE REDEEMABLE PREFERRED SHARES - (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | 24 Months Ended | ||||||||||||||||||
Oct. 20, 2020 CNY (¥) shares | Oct. 20, 2020 USD ($) shares | Mar. 06, 2020 CNY (¥) | Feb. 22, 2019 CNY (¥) shares | Feb. 22, 2019 USD ($) $ / shares shares | Jan. 03, 2019 CNY (¥) shares | Jan. 03, 2019 USD ($) shares | Aug. 08, 2017 CNY (¥) shares | Aug. 08, 2017 USD ($) $ / shares shares | Oct. 31, 2020 | Jan. 31, 2019 $ / shares shares | Dec. 31, 2020 | Sep. 30, 2020 shares | Dec. 31, 2022 shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 CNY (¥) | Dec. 31, 2022 shares | Jan. 12, 2021 shares | Oct. 20, 2020 $ / shares | Aug. 14, 2018 CNY (¥) shares | Aug. 14, 2018 USD ($) $ / shares shares | |
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Proceeds from redeemable convertible preferred stock | ¥ | ¥ 795,420 | ||||||||||||||||||||||
Shares of one class converted into another conversion ratio | 0.10 | ||||||||||||||||||||||
Stock issuance cost | ¥ | ¥ 14,458 | 3,144 | |||||||||||||||||||||
Accretion of convertible redeemable preferred shares to redemption value | ¥ | ¥ 1,989 | 62,733 | ¥ 36,802 | ||||||||||||||||||||
Ordinary shares, shares outstanding | 338,498,819 | 337,969,926 | 337,969,926 | 338,498,819 | |||||||||||||||||||
Maximum | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Tenure to fail as qualified public offering | 5 years | 5 years | 5 years | ||||||||||||||||||||
Threshold limit to cure any material breach or violation | 30 days | ||||||||||||||||||||||
Tenure of the founder of the company in the capacity of chairman or president or in any other capacity | 5 years | ||||||||||||||||||||||
Variable Interest Entities | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Stock repurchased during period | 104,478 | 104,478 | |||||||||||||||||||||
Payments for the repurchase of redeemable convertible preferred stock and common stock | ¥ 44,705 | $ 6,657 | |||||||||||||||||||||
Deemed dividend to the holders of redeemable convertible preferred stock and equity stock | ¥ | 32,840 | ||||||||||||||||||||||
Variable Interest Entities | Convertible Loan Agreement | Convertible Debt | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Debt instrument face value | ¥ 138,695 | $ 22,000 | |||||||||||||||||||||
Series A Redeemable Convertible Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Convertible redeemable preferred shares | 3,656,716 | 3,656,716 | |||||||||||||||||||||
Convertible redeemable preferred shares per share | $ / shares | $ 3.032 | ||||||||||||||||||||||
Proceeds from redeemable convertible preferred stock | ¥ 69,800 | $ 11,087 | |||||||||||||||||||||
Shares of one class converted into another number | 31,343,284 | ||||||||||||||||||||||
Shares converted from one class to another conversion price | $ / shares | $ 0.3032 | ||||||||||||||||||||||
Temporary equity liquidation preference per share as a percentage of issue price | 150% | 150% | |||||||||||||||||||||
Temporary equity redemption price as percentage of issue price per share | 150% | 150% | |||||||||||||||||||||
Accretion of convertible redeemable preferred shares to redemption value | ¥ | ¥ 867 | ¥ 28,134 | |||||||||||||||||||||
Series A Redeemable Convertible Preferred Shares | Modification Of Redeemable Convertible Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Reclassification from permanent equity to temporary equity | ¥ | ¥ 625 | ||||||||||||||||||||||
Series A Redeemable Convertible Preferred Shares | Variable Interest Entities | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Temporary equity shares repurchased during the period shares | 522,388 | 522,388 | |||||||||||||||||||||
Series B Redeemable Convertible Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Temporary equity liquidation preference per share as a percentage of issue price | 140% | 140% | |||||||||||||||||||||
Temporary equity redemption price as percentage of issue price per share | 140% | 140% | |||||||||||||||||||||
Series B Redeemable Convertible Preferred Shares | Series B Two Redeemable Convertible Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Convertible redeemable preferred shares | 59,327,653 | 59,327,653 | |||||||||||||||||||||
Convertible redeemable preferred shares per share | $ / shares | $ 1.0619 | ||||||||||||||||||||||
Proceeds from redeemable convertible preferred stock | ¥ 439,501 | $ 63,000 | |||||||||||||||||||||
Series C One Redeemable Convertible Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Convertible redeemable preferred shares | 61,364,562 | 61,364,562 | |||||||||||||||||||||
Convertible redeemable preferred shares per share | $ / shares | $ 1.635331 | ||||||||||||||||||||||
Proceeds from redeemable convertible preferred stock | $ | $ 100,351 | ||||||||||||||||||||||
Temporary equity liquidation preference per share as a percentage of issue price | 100% | 100% | |||||||||||||||||||||
Stock issuance cost | ¥ 13,386 | $ 2,000 | |||||||||||||||||||||
Series B 1 convertible redeemable preferred shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Number of shares issued in exchange for Convertible debt | 21,735,721 | ||||||||||||||||||||||
Series B 1 convertible redeemable preferred shares | Variable Interest Entities | Warrant Agreement | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Class of warrants or rights number of securities called by warrants or rights | 21,735,721 | 21,735,721 | |||||||||||||||||||||
Class of warrants or rights exercise price per share | $ / shares | $ 1.0122 | ||||||||||||||||||||||
Series A Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Percentage of original issue price on each preferred share | 150% | ||||||||||||||||||||||
Annual compound interest rate on the original issue price on each preferred share accrued | 8% | ||||||||||||||||||||||
Change in fair value of preferred shares after modification | ¥ | ¥ 1,284 | ¥ 9,055 | |||||||||||||||||||||
Preferred shares, shares outstanding | 31,343,284 | ||||||||||||||||||||||
Ordinary shares, shares outstanding | 31,343,284 | ||||||||||||||||||||||
Series A Preferred Shares | Maximum | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Changes in fair value of the ordinary shares | ¥ | 1,760 | ||||||||||||||||||||||
Series A Preferred Shares | Minimum [Member] | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Changes in fair value of the ordinary shares | ¥ | ¥ 9,055 | ||||||||||||||||||||||
Series B 1 Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Change in fair value of preferred shares after modification | ¥ | 82 | ||||||||||||||||||||||
Preferred shares, shares outstanding | 21,735,721 | ||||||||||||||||||||||
Ordinary shares, shares outstanding | 21,735,721 | ||||||||||||||||||||||
Series B 2 Preferred Shares | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Change in fair value of preferred shares after modification | ¥ | ¥ 394 | ||||||||||||||||||||||
Preferred shares, shares outstanding | 59,327,653 | ||||||||||||||||||||||
Ordinary shares, shares outstanding | 59,327,653 | ||||||||||||||||||||||
Series C Preferred Stock | |||||||||||||||||||||||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||||||||||||||||||||||
Temporary equity redemption price as percentage of issue price per share | 100% | 100% | |||||||||||||||||||||
Preferred shares, shares outstanding | 61,364,562 | ||||||||||||||||||||||
Ordinary shares, shares outstanding | 61,364,562 |
CONVERTIBLE REDEEMABLE PREFER_4
CONVERTIBLE REDEEMABLE PREFERRED SHARES - Schedule of Preferred Stock (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||
Beginning balance | ¥ 1,407,536 | ¥ 547,843 | |
Accretion of Preferred Shares to redemption value | 1,989 | 62,733 | ¥ 36,802 |
Conversion of preferred shares to ordinary shares upon the IPO | (1,409,525) | ||
Ending balance | 0 | 1,407,536 | 547,843 |
Series A Redeemable Convertible Preferred Shares | |||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||
Beginning balance | 110,468 | 82,334 | |
Accretion of Preferred Shares to redemption value | 867 | 28,134 | |
Conversion of preferred shares to ordinary shares upon the IPO | (111,335) | ||
Ending balance | 0 | 110,468 | 82,334 |
Series B One Redeemable Convertible Preferred Shares | |||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||
Beginning balance | 142,481 | ||
Issuance of Preferred Shares | 138,695 | ||
Accretion of Preferred Shares to redemption value | 302 | 3,786 | |
Conversion of preferred shares to ordinary shares upon the IPO | (142,783) | ||
Ending balance | 0 | 142,481 | |
Series B Two Redeemable Convertible Preferred Shares | |||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||
Beginning balance | 495,799 | 465,509 | |
Accretion of Preferred Shares to redemption value | 733 | 30,290 | |
Conversion of preferred shares to ordinary shares upon the IPO | (496,532) | ||
Ending balance | 0 | 495,799 | ¥ 465,509 |
Series C Redeemable Convertible Preferred Shares | |||
CONVERTIBLE REDEEMABLE PREFERRED SHARES | |||
Beginning balance | 658,788 | ||
Issuance of Preferred Shares | 658,265 | ||
Accretion of Preferred Shares to redemption value | 87 | 523 | |
Conversion of preferred shares to ordinary shares upon the IPO | (658,875) | ||
Ending balance | ¥ 0 | ¥ 658,788 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2020 shares | Dec. 31, 2022 CNY (¥) installment shares | Dec. 31, 2022 USD ($) installment shares | Dec. 31, 2021 CNY (¥) shares | Jul. 31, 2020 shares | Apr. 15, 2019 shares | |
SHARE-BASED COMPENSATION | ||||||
Share-based compensation arrangement by share-based payment award, percentage of outstanding stock maximum | 3% | |||||
Share based compensation by share based payment arrangement additional number of shares available for issuance as percentage of outstanding stock maximum | 1% | |||||
Vesting period | 4 years | 4 years | ||||
Number of equal installments | installment | 4 | 4 | ||||
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 | ||||
Restricted Stock Units (RSUs) | ||||||
SHARE-BASED COMPENSATION | ||||||
Allocated share based compensation expense | ¥ 2,355 | $ 341 | ¥ 24,380 | |||
Number of units vested | 1,737,902 | 1,737,902 | ||||
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 | 479,741 | 479,741 | 1,494,650 |
SHARE-BASED COMPENSATION - Sche
SHARE-BASED COMPENSATION - Schedule of the option activities (Details) | 12 Months Ended | |||||||
Dec. 31, 2022 $ / shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2021 $ / shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 $ / shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | Dec. 31, 2019 CNY (¥) ¥ / shares shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | |
SHARE-BASED COMPENSATION | ||||||||
Number of Options, Outstanding at beginning balance | shares | 13,102,590 | 7,409,599 | 2,757,124 | |||||
Number of Options, Granted | shares | 4,314,826 | 6,503,323 | 5,198,298 | |||||
Number of Options, Forfeited | shares | (1,384,672) | (280,222) | (545,823) | |||||
Number of Options, Exercised | shares | (164,815) | (530,110) | ||||||
Number of Options, Expired | shares | (705,383) | |||||||
Number of Options, Outstanding at ending balance | shares | 15,162,546 | 13,102,590 | 7,409,599 | 2,757,124 | ||||
Number of options, Vested and expected to vest | shares | 15,162,546 | |||||||
Number of options, Exercisable | shares | 6,555,655 | |||||||
Weighted Average Exercise Price, Outstanding at beginning balance | $ / shares | $ 1.60 | $ 1.32 | $ 0.55 | |||||
Weighted Average Exercise Price, Granted | $ / shares | 0.69 | 1.82 | 1.65 | |||||
Weighted Average Exercise Price, Forfeited | $ / shares | 1.45 | 1.47 | 0.71 | |||||
Weighted-Average Exercise Price, Exercised | $ / shares | 0.30 | 0.51 | ||||||
Weighted-Average Exercise Price, Expired | $ / shares | 1.20 | |||||||
Weighted Average Exercise Price, Outstanding at ending balance | $ / shares | 1.39 | 1.60 | 1.32 | |||||
Weighted Average Exercise Price, Vested and expected to vest | $ / shares | 1.39 | |||||||
Weighted average exercise price, Exercisable | $ / shares | 1.06 | |||||||
Weighted-Average Grant Date Fair Value, Outstanding at beginning balance | (per share) | 1.10 | ¥ 7.21 | 0.47 | ¥ 3.28 | 0.28 | ¥ 1.93 | ||
Weighted-Average Grant Date Fair Value, Granted | (per share) | 0.38 | 2.52 | 1.74 | 11.22 | 0.56 | 3.92 | ||
Weighted-Average Grant Date Fair Value, Forfeited | (per share) | 1.14 | 7.52 | 0.95 | 6.31 | 0.37 | 2.56 | ||
Weighted-Average Grant Date Fair Value, Exercised | (per share) | 0.22 | 1.47 | 0.28 | 1.89 | ||||
Weighted-Average Grant Date Fair Value, Expired | (per share) | 0.84 | 5.66 | ||||||
Weighted-Average Grant Date Fair Value, Outstanding at ending balance | (per share) | 0.91 | ¥ 5.98 | $ 1.10 | ¥ 7.21 | $ 0.47 | ¥ 3.28 | ¥ 1.93 | |
Weighted-Average Grant Date Fair Value, Vested and expected to vest | (per share) | 0.91 | ¥ 5.98 | ||||||
Weighted Average Remaining Contractual Term, Outstanding at beginning balance (In Years) | 8 years 1 month 20 days | 8 years 10 months 9 days | 8 years 10 months 20 days | 8 years 8 months 1 day | ||||
Weighted Average Remaining Contractual Term, Outstanding at ending balance | 8 years 1 month 20 days | 8 years 10 months 9 days | 8 years 10 months 20 days | 8 years 8 months 1 day | ||||
Weighted Average Remaining Contractual Term, Vested and expected to vest | 8 years 1 month 20 days | |||||||
Aggregate Intrinsic Value, Outstanding at beginning balance | ¥ | ¥ 12,335 | ¥ 112,024 | ¥ 7,728 | |||||
Aggregate Intrinsic Value, Outstanding at ending balance | ¥ | ¥ 1,290 | ¥ 12,335 | ¥ 112,024 | ¥ 7,728 | ||||
Aggregate Intrinsic Value, Vested and expected to vest | ¥ | ¥ 1,290 | |||||||
Weighted-Average Grant Date Fair Value, Exercisable | (per share) | $ 0.79 | ¥ 5.24 | ||||||
Aggregate Intrinsic Value, Exercisable | ¥ | ¥ 1,290 | |||||||
Weighted Average Remaining Contractual Term, Exercisable | 7 years 8 months 4 days |
SHARE-BASED COMPENSATION - Sc_2
SHARE-BASED COMPENSATION - Schedule of fair value of the share options (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
SHARE-BASED COMPENSATION | |||
Risk-free interest rate minimum | 1.80% | 1.10% | 1.60% |
Risk-free interest rate maximum | 3.70% | 1.80% | 2.10% |
Dividend yield | 0% | 0% | 0% |
Expected volatility range minimum | 55.60% | 52.20% | 54.90% |
Expected volatility range maximum | 57% | 56.40% | 58.10% |
Contractual life | 10 years | 10 years | 10 years |
Maximum | |||
SHARE-BASED COMPENSATION | |||
Exercise multiple | 2.80 | 2.80 | 2.80 |
Minimum | |||
SHARE-BASED COMPENSATION | |||
Exercise multiple | 2.20 | 2.20 | 2.20 |
SHARE-BASED COMPENSATION- Share
SHARE-BASED COMPENSATION- Share-based compensation expenses (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Options | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expenses | ¥ 21,747 | $ 3,153 | ¥ 36,004 | ¥ 0 |
Restricted Stock Units (RSUs) | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expenses | 2,355 | 341 | 24,380 | |
Research and development expenses | Options | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expenses | 10,581 | 1,534 | 15,670 | |
Research and development expenses | Restricted Stock Units (RSUs) | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expenses | 644 | 93 | 4,052 | |
Administrative expenses | Options | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expenses | 11,166 | 1,619 | 20,334 | |
Administrative expenses | Restricted Stock Units (RSUs) | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expenses | ¥ 1,711 | $ 248 | ¥ 20,328 |
INCOME TAX EXPENSE - Additional
INCOME TAX EXPENSE - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | 36 Months Ended | ||
Jan. 01, 2008 | Dec. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2021 | |
INCOME TAX EXPENSE | ||||
Unrecognized tax benefits, income tax penalties and interest accrued | ¥ 0 | ¥ 0 | ¥ 0 | |
CHINA | ||||
INCOME TAX EXPENSE | ||||
Statutory Income Tax Rate | 25% | |||
Tax reduction percentage | 50% | |||
CHINA | Maximum | ||||
INCOME TAX EXPENSE | ||||
Tax reduction percentage | 75% | |||
CHINA | Minimum | ||||
INCOME TAX EXPENSE | ||||
Tax reduction percentage | 50% | |||
HONG KONG | ||||
INCOME TAX EXPENSE | ||||
Income tax applicable tax rate | 16.50% | |||
Assessable profits | ¥ 0 | |||
UNITED STATES | ||||
INCOME TAX EXPENSE | ||||
Statutory Income Tax Rate | 21% | |||
CA | ||||
INCOME TAX EXPENSE | ||||
State income tax rate | 8.84% | |||
Percentage of withholding tax rate on dividends payable to non US resident enterprises | 30% |
INCOME TAX EXPENSE - Summary of
INCOME TAX EXPENSE - Summary of Reconciliation Between the Income Tax Expense (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
INCOME TAX EXPENSE | ||||
Loss before income tax | ¥ (607,487) | $ (88,077) | ¥ (451,754) | ¥ (211,900) |
Income tax computed at respective applicable tax rate | (138,079) | (20,020) | (94,531) | (48,607) |
Research and development super-deduction | (65,299) | (9,467) | (44,646) | (22,121) |
Non-deductible expenses | 142 | 21 | 193 | 100 |
Changes in valuation allowance | 203,258 | 29,469 | ¥ 138,984 | ¥ 70,628 |
Income tax expense | ¥ 22 | $ 3 |
INCOME TAX EXPENSE - Details of
INCOME TAX EXPENSE - Details of Tax Effects of Temporary Differences that Give Rise to the Deferred Tax Balances (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 CNY (¥) |
Deferred tax assets: | ||||||
Net operating loss carry forward | ¥ 441,456 | $ 64,005 | ¥ 274,502 | |||
Capitalized research and development expenses | 21,630 | 3,136 | ||||
Accrued expenses | 10,482 | 1,520 | ||||
Capitalized Inventory | 5,624 | 816 | 4,361 | |||
Depreciation and amortization of property, equipment and software | 2,430 | 352 | 2,075 | |||
Others | 4,417 | 640 | 1,843 | |||
Gross deferred tax assets | 486,039 | 70,469 | 282,781 | |||
Less: valuation allowance | ¥ (486,039) | $ (70,469) | ¥ (282,781) | $ (40,999) | ¥ (143,797) | ¥ (73,169) |
INCOME TAX EXPENSE - Disclosure
INCOME TAX EXPENSE - Disclosure of Movement of the Valuation Allowance (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
INCOME TAX EXPENSE | ||||
Balance as of January 1 | ¥ 282,781 | $ 40,999 | ¥ 143,797 | ¥ 73,169 |
Addition | 203,258 | 29,470 | 138,984 | 70,628 |
Balance as of December 31 | ¥ 486,039 | $ 70,469 | ¥ 282,781 | ¥ 143,797 |
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 | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | Dec. 31, 2019 CNY (¥) | |
Numerator: | |||||
Net loss attributable to Gracell Biotechnologies Inc.'s shareholders | ¥ (607,509) | $ (88,080) | ¥ (451,754) | ¥ (211,900) | |
Accretion of convertible redeemable preferred shares to redemption value | ¥ | (1,989) | (62,733) | ¥ (36,802) | ||
Net loss attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | ¥ (607,509) | $ (88,080) | ¥ (453,743) | ¥ (274,633) | |
Denominator: | |||||
Weighted-average number of ordinary shares outstanding-basic (in shares) | 338,342,051 | 338,342,051 | 328,866,599 | 99,044,776 | |
Weighted-average number of ordinary shares outstanding-diluted (in shares) | 338,342,051 | 338,342,051 | 328,866,599 | 99,044,776 | |
Net loss per share attributable to Gracell Biotechnologies Inc.'s ordinary shareholders-basic | (per share) | ¥ (1.80) | $ (0.26) | ¥ (1.38) | ¥ (2.77) | |
Net loss per share attributable to Gracell Biotechnologies Inc.'s ordinary shareholders-diluted | (per share) | ¥ (1.80) | $ (0.26) | ¥ (1.38) | ¥ (2.77) |
NET LOSS PER SHARE - Summary _2
NET LOSS PER SHARE - Summary of Anti-dilutive Securities (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Convertible redeemable preferred shares | |||
Summary of Anti-dilutive Securities | |||
Anti-dilutive securities | 110,230,842 | ||
Share options and RSUs | |||
Summary of Anti-dilutive Securities | |||
Anti-dilutive securities | 2,851,075 | 930,498 |
RELATED PARTY TRANSACTIONS - Sc
RELATED PARTY TRANSACTIONS - Schedule Of Related Party Transactions (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Unitex Capital Ltd | ||||
Related Party Transactions | ||||
Payment for professional service fee | ¥ 10,885 | $ 1,578 | ¥ 3,354 | ¥ 2,631 |
RESTRICTED NET ASSETS - Additio
RESTRICTED NET ASSETS - Additional Information (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2022 CNY (¥) | |
RESTRICTED NET ASSETS | |
Minimum percentage of profit allocated to general reserve fund | 10% |
Maximum threshold percentage of general reserve fund to registered capital | 50% |
Percentage of annual appropriations after-tax income prior to payment of dividends | 10% |
Percentage of threshold exceeded on company subsidiaries net asset | 25% |
Total restricted net assets | ¥ 91,626 |
Percentage of restricted net assets of consolidated subsidiaries not exceed consolidated net assets | 25% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions | 1 Months Ended |
Mar. 31, 2023 USD ($) | |
Subsequent Event | Seagen | |
Subsequent Event [Line Items] | |
Nonrefundable payments | $ 45 |