Relay Therapeutics, Inc. (RLAY) Earnings Call Transcript & Summary

Okay. Great. Good afternoon. I'm Eric Joseph, senior biotech analyst with JPMorgan. Our next presenting company this afternoon is Relay Therapeutics, and it's my pleasure to welcome and introduce CEO, Sanjiv Patel, to tell us a little bit about the company. There's a Q&A session after the presentation. Just raise your hand if you want to ask a question, we'll get a mic to you. And for those tuning in online, you can submit a question via the digital conference book. So with that, Sanjiv.

Thank you. Thank you, Eric, for the introduction. Thank you, JPMorgan as well for the invitation. We'll be making a series of forward-looking statements this afternoon, which is subject to the standard risks and uncertainties. The actual events may differ materially from the estimates and projections shown here. For a comprehensive look at our disclosure schedules, please refer to our SEC filings. Now that's over. Welcome, and thank you for braving the flood warning that we all got. It's not going to be [ working here ]. So I think you will all be safe for the next 40 minutes. Those of you who are watching on the East Coast, good evening, and those of you who are outside the U.S., thank you. Over the next 45 minutes, we'll talk about how we have got on, on our journey of combining leading-edge experimental and computational techniques to make the discovery of medicines more efficient and effective. We set out a few years ago now in 2016 to validate our approach of using leading-edge structural techniques and combining it with computational approaches, and we wanted to do that as rapidly as possible. So we chose genetically validated targets in precision oncology. And here we are now in 2023, with 3 programs wholly created by our platform in the clinic and the deepest pipeline in Precision Medicine behind it. So we've got a long way to validating our approach. And a couple of years ago, we've moved on now towards getting those medicines towards patients and scaling our approach across different therapeutic areas. To remind you, our platform consists of a different set of integrated computational and experimental tools, capabilities, and it's all needed together by multidisciplinary bilingual scientists. And the more we do, we believe, the better we get. And we focus our efforts and not on elucidating novel biology, but on working on validated targets and focusing on our platform on making medicines. We understand the protein very deeply and try and create new novel modulation hypotheses. We identify hits and then rapidly take those hits to lead optimization and into the clinic. We focus on making medicines that are exquisitely selective and therefore, more tolerable and by definition, that allows us to inhibit the target much more deeply and create efficacy that patients are solely in need of. When I stood here 3 years ago, most of this was theoretical. We were a preclinical private company with 2 named programs. And so here we are short 3 years later for the first time back again, and we have a very deep pipeline of assets. And what you can see here is one of the deepest research portfolios in Precision Medicine, and that helps us validate that our approach is productive in research. Over the last 3 years, we've built a development capability that has executed as well as any other. And we've shown validating clinical data for our RLY-4008 program, and we're now starting to contemplate commercialization for the first of our assets. We've expanded from being a precision oncology company now to expanding into genetic disease. We've gone from being a small molecule inhibitor focused company to now creating degraders. And today, we'll show you that we've extended that now into small molecule chaperones. And so we have a pretty deep pipeline ahead of us. And so it's going to be an exciting 2023 full of catalysts and milestones. And over the presentation, I'll take you through those. So let me start by taking you through the 3 clinical programs and franchises that we have. FGFR2 has all the hallmarks of being a cancer driver oncogene. It's altered in about 11,000 to 35,000 patients in the U.S. each year. And unfortunately, traditional approaches to create medicines against FGFR2 have only resulted in nonselective inhibitors. Those nonselective inhibitors have a degree of off-target toxicity, namely hypophosphatemia and diarrhea. And that leads to dose-limiting effects. And we unable to dose these patients to the level that will create efficacy that we hopefully will want. And so the proved therapies have objective rates of response between 20 -- so they're 36% and 42%. Now why is this? It's because traditional approaches to drug discovery lead to this, which is the FGFR2 protein that you see here looks exactly like the FGFR1 protein. And so there's no real handle for selectivity. Using our platform, we synthesize the proteins, use leading-edge structural biology to understand the protein confirmations and the dynamics and then use unprecedented computational power to create long-time scale molecular dynamic simulations. And what you see is this is the proteins look and behave differently, and it gives our drug discovery teams and the ability to create selectivity. And we created a preclinical profile in RLY-4008 that did exactly that. And we're happy to say that, that is starting to translate into the clinical data, although it's early in interim, what we've shown is we have a very selective molecule. And it has minimized almost completely the off-target effects of hyperphosphatemia and diarrhea. And that's allowed us to dose much more than has been previously possible using the nonselective inhibitors. And we're able to dose at a sustained level well above 90% target inhibition. And that's led to efficacy that's not been seen before. At the ESMO meeting last year, we showed in 17 cholangiocarcinoma patients that we showed an interim early objective rate response of 88%. Just to remind you, the approved therapies in this space have objective rate of responses of between 20% and 42%. And so this is a real step change in therapies for these patients. We've been able to, over the last few years, execute very effectively in the clinic. And this trial, the RLY-4008 refocus trial commenced in the final months of 2020. And less than a year later, we were able to show clinical proof of mechanism are showing that we could avoid the off-target effects of hyperphosphatemia and diarrhea. And then we were able to engage with the agency and come forth with a dose that we wanted to use in our pivotal cohorts. And then last year at the ESMO meeting, we showed interpretive early efficacy data, of 88% objective rate of response. And we'll be able to use that data set to engage with the agency and come forward with a path towards approval. And so this year, it's all about execution, and the milestones consists of 2 clear things, which is, we commit to fully enrolling the pivotal cohort before the end of the year, and that should give you a sense of how we're thinking about getting this therapy to patients. And then secondly, the commercial opportunity here has been on people's minds, and we commit to sharing the non-cholangiocarcinoma expansion cohort data to give you a sense of the size of the commercial opportunity that this medicine could have. And so with that, it's all about execution and getting this medicine to patients as rapidly as possible. And finally, we'll start to think about how to commercialize in all the various strategic options that sit in front of us as we start to think about approval. So I'll move on to our second franchise, which is breast cancer. Hormone receptor positive HER2-negative breast cancer is a significant unmet medical need. It has been transformed over the last few years through the introduction of targeted therapies. In 2015, the first CDK4/6 was approved. But even though these new therapies have come online, it still remains a significant unmet need for 3 reasons. Firstly, there are a limited amount of targeted therapies available to patients. Secondly, the toxicity profiles of these targeted therapies mean that they are very challenging to combine and create the durable efficacy that these patients require. And finally, patients that we have resistance to these targeted therapies, there are very few treatment options left to them other than salvage or chemotherapy. And so our goal using the Dynamo platform is to create a set of selective medicines that can be well tolerated together can be combined and can provide unprecedented efficacy for patients. And we do that through our cornerstone foundational set of assets against PI3K-alpha mutants. And we combine that with rational combination partners in CDK2, ER-alpha degrader and several other undisclosed programs. The goal here is to provide a new standard of care for these patients. So I'll start by talking about our PI3K-alpha mutant selective franchise. This is a significant unmet need with 30% of hormone receptor positive HER2-negative breast cancer patients having a PI3K-alpha mutation. Unfortunately, traditional approaches to creating medicines for this target have led to nonselective inhibitors. These inhibitors are not selective at mutant versus wild type, and they're not selective against the various PI3K isoforms. And again, that leads to limited tolerability with challenging effects of hypoglycemia, GI, rash as well as fatigue. And so all of this leads to limited ability to inhibit the target. And that, in turn, leads to limited efficacy in these patients. There's virtually no monotherapy activity seen in these nonselective inhibitors. And for the breast cancer patients that have these inhibitors in combination with fulvestrant, we're seeing around 19% objective rates of response. And so we set out a few years ago to try and change the paradigm here. And we synthesized what we believe to be the first full length structures of mutant and wild-type PI3K-alpha and then created the first cryo-EM images and then created unprecedented molecular dynamic simulations, and we found a novel modulation hypotheses. Actually, we found multiple ways to try and modulate this target outside of the active site. And we created a set of what we believe to be hypothesis or how to create a mutant-selective PI3K-alpha molecules. RLY-2608 was the first of the preclinical molecules that we showcased and what you see in the preclinical profile on this slide is that it's selective. It avoids many of the off-target toxicities that the nonselective inhibitors have been plagued with. It allows us preclinically to dose well above the IC80, and it leads to efficacy in animal models. And so we were thrilled to bring this into the clinic in December of 2021, and the trial consists of 2 arms: First arm is in monotherapy in PI3K-alpha mutant altered patients either in metastatic or locally unresectable tumors. And then a few months later in April of 2022, we started the combination trial in hormone receptor positive HER2-negative breast cancer patients in combination with fulvestrant. And so our commitment this year is to share data from the clinical trials for both the monotherapy and the combination arm. And the goal of that data will be aspirationally to show clinical proof of mechanism. And so what we want to share with you this half year is PK, acute safety and tolerability and PD. Ideally, what we want to show is that we can dose above the IC80 for PI3K mutants. We can see acute safety and tolerability profile that avoids hypoglycemia, rash, diarrhea and fatigue, to the extent that it has created tolerability challenges with the nonselective inhibitors and that we can show PD assays to show that we're engaging the target and obviously, early antitumor activity. That should give us comfort that we've translated our preclinical profile into the clinic. PI3K-alpha is a significant medical challenge and we've continued to work on that over various mechanisms, both mutant selective and pan-mutant as well as combining that with various combination partners to make sure that these patients have durable efficacy. The first of those efforts after RLY-2608 to come into the clinic will be RLY-5836. This is a pan-mutant PI3K-alpha inhibitor, very similar profile to RLY-2608, but chemically distinct. The third of the efforts is a PI3K-alpha mutant selective effort. And then the first of the rational combination partners to enter the clinic will be a selective CDK2. This is a therapeutically relevant target because increased levels -- increased activity levels of CDK2 are seen in CDK4/6 resistant patients. And so we were very pleased to rapidly create a CDK2 selective inhibitor going from initial molecules to lead series of just about a year. And so this will enter the clinic in the early part of 2024. Hormone-receptor therapy has been the backbone of treatment in these patients, and there have been several novel approaches to creating the next generation of hormone receptor therapy. We believe that heterobifunctional degraders, have been one of the most high potential of these. And so we were very pleased to create using our platform, degraders and going from these kind of trial and [ their empirical way ] that degraders have been created to date. It's using our platform to solve a complex 3-body problem very rationally. And so we will nominate a development candidate in 2023. All of this leads to a very deep pipeline of breast cancer assets that we hope will transform the treatment of hormone-receptor HER2-negative patients. And we look forward to sharing data for the first time this year. That leads us to the third of our clinical assets, GDC-1971. This is our Ship 2 asset that entered the clinic in 2020. We were thrilled to partner with Roche Genentech in 2020, this asset. We believe we have the potential to have a best-in-class ship 2 assets, and we believe that Roche Genentech has the potential to have the best-in-class KRAS G12C. We saw the first glimpse of Roche's data at the World Lung meeting last year, it starts to validate that. And so we're excited about the combination of ROI or GDC-1971 with Roche's KRAS G12C. We were also excited about the partnership of having our SHP2 inhibitor, potentially combined with Roche's deep pipeline of targeted therapeutics and the first of those additional trials started last summer with GDC-1971 being trialed in combination with Roche's PD-L1 antibody. And so we look forward to Roche continuing to execute these trials. And as you know, we retain meaningful economics in our SHP2 inhibitor. Finally, we have a very deep pipeline of preclinical assets. We have 5 unnamed on the pipeline and obviously, others behind that. That splits across breast cancer, tumor-agnostic oncology assets as well as genetic disease. And as we've talked about, we've had small molecule inhibitors. We've also used the platform against creating degraders. And then finally, for our genetic disease programs we're sharing today that we've used the platform to create small molecule chaperones. The platform consists of a group of capabilities split across leading-edge structure biology and experimental capabilities as well as computational tools. We believe we have as deep as experience as exists in the industry and combining these 2 sets of tools together, and we have a team with a deep experience in doing that. The platform doesn't stand still and that we continue to augment it. We were very pleased to add machine learning DNA-encoded library screens to an acquisition that we made a couple of years ago, and we continue to invest in growing our automation and our automated chemical design approach continues to make the design and synthesis a molecule is much more efficient. With all of that said, we now have one of the deepest pipelines of Precision Medicine assets that has ever been created. And we've done this incredibly rapidly. And so our research capability is about as productive as we'd ever hoped it could be. We've moved that now by building a very effective development organization, and we're on the cusp now of building a commercial capability. We've moved from oncology and now expanded into genetic disease. We've gone from creating small molecule inhibitors to degraders to small molecule chaperones. And we now have a team that is experienced as anyone in the industry of combining computational tools of the leading-edge structural biology and deploying that platform against targets and bringing that preclinical data and translating it into the clinic. Our research organization has now been in place for over 6 years. The research leaders have been in place over that time, and they get better each time they do a program. And I think they're excited about tackling the hardest problems in drug discovery. We have $1.1 billion on our balance sheet as of today, and that leads us to the ability to execute very effectively against the milestones that we've laid out for the year. For our RLY-4008 program, our selective FGFR2, we commit to fully enrolling the pivotal cohort in the second half of 2023, and we commit to disclosing non-cholangiocarcinoma, a cohort data from our expansion trials. And so this is all about now executing to get this medicine to patients as rapidly as possible. On our breast cancer franchise, RLY-2608, which has been in the clinic now since December of 2021. We will show data in the clinic, and our hope is that we will show clinical proof of mechanism for this asset. The second of our pan-mutant PI3K inhibitors will go into the clinic in Q2, and we will nominate a development candidate for our ER-alpha degrader rational combination partner for our PI3K assets as well as start our selective CDK2 in the clinic early in 2024. For our SHP2 assets, we'll continue to prosecute with Roche Genentech, the combination trials that are ongoing. And for our preclinical assets, we will continue to push those forward both across degraders, small molecule chaperones as well as inhibitors. With all of this said, the key thing is over the last 4 or 5 years, each year, we put this slide up and each year we've delivered against it. And so with that track record, I look forward to coming back over the course of the year and checking each one of these off. Because if nothing else, this team is very execution-focused and is focused on making sure that we can get these -- each of these goals checked off and get these medicines to patients. And so with that, I'm going to invite Pete Rahmer, Corporate Development Officer; and Don Bergstrom, President of R&D up, and we will hand it back to Eric Joseph to take questions. Thank you.

Great. Thanks, Sanjiv. Where to start, so I guess maybe just picking up on several data sets forthcoming over the course of 2023, beginning with -- well, let's start with the updated -- the full Phase I dose escalation data anticipated in the first half of this year. But the looks of things, it will include a good number of -- good additional number of non-FGFR2 fusion and also FGFR-naive cholangiocarcinoma subjects at, at least 70 milligrams. I guess how should we be thinking about the balance of tumor types that are comprising the full escalation data set and sort of their treatment backgrounds as level setting expectations for data?

Maybe I hand over to you, Pete.

Yes. Yes, so I think our expectation is we're not going to learn too much more than we've already learned from the dose escalation data over the 2 data cuts we presented to date. As a reminder, that dose escalation data is largely in cholangiocarcinoma patients, and it's across 15 different dose levels and schedules. It doesn't include that many patients outside of cholangiocarcinoma. I think that number is still in the 10% to 15% range. And again, it's across unoptimized doses. So really just a box-checking exercise to bring that study to a close and give the investigators their due recognition for an amazingly executed study.

How should we be thinking about the depth of activity that can be achieved with 4008 in the non-FGFR2 fusion, non-cholangiocarcinoma cohorts that are being accrued. I guess is there anything from preclinically, for instance, using patient-derived tumor models that suggest that would inform what the relative sensitivity is in those other tumor types to RLY-4008?

Don, do you want to take that?

Yes. So I think we've generated a robust preclinical database across all of the major alteration types. So fusions, including obviously fusions in cholangiocarcinoma and beyond cholangiocarcinoma, both amplifications in FGFR2 and then oncogenic activating mutations of FGFR2. So I think based on these, we feel that all 3 are bona fide tumor drivers and in the right tumor context could be highly responsive to RLY-4008. That being said, I think that right tumor context is going to be a key question that we're answering right now in the clinic. I think our belief, based on the experience with other fusion oncogenes is that fusion oncogenes tend to be somewhat histology independent, so it doesn't really matter what the tumor type is, if a tumor is carrying a fusion oncogene, it tends to be driven by that oncogene and can be responsive. When you get into mutations and amplifications, I think the experience in precision oncology is there can be more context dependence. For example, in certain diseases, you might have an FGFR2 oncogenic mutation, but may -- it may coexist with activating mutations and other oncogenes as well. And I think the question that we'll be answering right now in the clinic is, in that context, do you still see a response to 4008 monotherapy? Or is the sensitivity blunted by the presence of a second oncogenic driver.

[ Please move, we ] viewed as compelling activity in those settings those non-fusion non-cholangiocarcinoma settings. And I imagine the response is somewhat predicated on the performance of standard of care. So can you just kind of describe what that is and ultimately what we'll be compelling?

I'll give that one to you, Pete, and then talk about…

Yes. So I think there is probably 2 different ways to answer that. One is we -- in the expansion cohorts, these are largely late-line patients and not really being enriched for any specific tumor type. And so traditionally, in late-line cancer patients, where there is not an existing standard of care, the regulatory hurdle placed on agents like that tends to be response rates in the neighborhood of 25% to 30% with a median duration of response of around 6 months. And so as we evaluate these initial data sets, I would say that's the starting hurdle to understand the developable path forward. And as Don alluded to, as we see these data and understand where there may be an amplified signal, if it happens to be histology specific as you allude to, Eric, we can then start to assess the existing standards of care and now they understand what the clinical differentiation barometer might be.

But I guess there's signs of optimism around could there be activity outside of the cholangiocarcinoma naive patients twofold. One is just the quality of the molecule that we've created and the depth of a target inhibition that we've been able to create, given the mechanism is avoiding the off-target toxicities that have limited the nonselective inhibitors. The second thing is, obviously, the nonselective inhibitors have generated anecdotal data to show that they have generated a signal outside of cholangiocarcinoma. So if you put the 2 together, there is some signs for optimism for why this data could show a signal outside of cholangiocarcinoma.

Okay. I guess, concern -- or sorry, concern that the appropriate word. I guess there's been some concern about FDA's [ conservatism ] around the eligibility of accelerated approvals or the use of accelerated approval, sorry, the use of single-arm studies to support accelerated approval in oncology. I guess is your expectation that 4008 and the refocused trial or at least the pivotal portion of the refocused trial will be eligible for registration on the base of a single-arm design?

Peter?

Yes. So we had a robust end of Phase I meeting with the FDA in which we discussed this very specific topic and came out of that meeting with general alignment on 70 milligrams once daily being a relevant recommended Phase II dose and the size of a potential path -- cohort for a potential pivotal cohort, and that's the 100 milligram -- 100 patients in the FGFR2 fusion FGFR-naive cholangiocarcinoma patients. This always has a caveat of -- that's dependent upon the regulatory and standard of care context at the time in which that data is generated. But that -- we do believe that, that path is available to us as we look at the current landscape of accelerated approved agents and their time line to potential full approval.