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

Good afternoon, everyone. Thank you so much for joining us. I'm Salveen Richter, biotechnology analyst at Goldman Sachs. I am really pleased to have with me Sanjiv Patel, President and CEO of Relay. Sanjiv, just to start here, could we just level set here with an overview of the Dynamo platform, and where you stand today with the optimization efforts that have played out and the acquisitions of technologies, as well as pipeline strategy and upcoming milestones that we should be looking at over the next 12 to 18 months?

Well, first, thanks for the invitation. In terms of the Dynamo platform, I think kind of close to 10 years ago now, we were one of the first wave of companies that put together computational approaches with experimental techniques to try and make this drug discovery process a little more easier than it has been. And so all intents and purposes over the years, we've done a great job of this in that we've been very productive. We've had now several programs enter the clinic, all kind of wholly created using our approach. But given the capital markets that we're in at the moment, we've made some tough choices over the course of the year to streamline our research portfolio down and focus on really kind of generating clinical data and value for our stakeholders. And so in terms of the pipeline in front of us, our FGFR2 program, we out licensed to Elevar and hopefully, they'll file an NDA imminently. Our PI3K-alpha mutant selective program, RLY-2608 is about to start a pivotal Phase III trial, which we're very excited about in a large patient population. Behind that, we have a vascular malformation program. And then behind that, we have 2 assets that are nearing IND. That's an NRAS-selective program and a Fabry's program. So I think we have cash into 2029 now. And so I think we find ourselves in a very strong position with meaningful runway ahead of us and significant clinical catalysts.

So starting with your PI3K-alpha inhibitor [ 28 ] could you walk us through the design features that position it well within this evolving HR+/HER2- breast cancer paradigm? And how is it different from competitors such as Lilly?

Yes. So to start with and to level set, hormone receptor positive, HER2- breast cancer is a very large patient population, and 40% of these patients have a PI3K-alpha mutation. And traditionally, they've been underserved. And all of the kind of emerging approaches have unfortunately led to in the post-CDK4/6 world to a PFS somewhere between 5 and 7 months. And so we've seen a lot of promise around the oral SERDs, KAT6, CDK4/6 retreatment. But unfortunately, all of the data that we've seen over the last few years has still led us to this situation of PFS in the 5- to 7-month range. And the challenge for PI3K inhibitors over the last few decades has been a lack of selectivity. And so unfortunately, the inhibitors are nonselective, and that leads to a range of toxicities, including hypoglycemia, diarrhea, rash, stomatitis, which means these patients can't stay on therapies. And so when we set out almost 10 years ago to create a selective inhibitor, we find a novel allosteric pocket and created an inhibitor that was mutant selective. And the hope was it would dial out these toxicities, allow greater dose intensity and that would translate into greater efficacy. And so that's exactly what we did. We entered the clinic as the first mutant selective inhibitor a few years ago. In terms of other mutant selective inhibitors, we know that Lilly has acquired STX-478, which has a similar [Technical Difficulty] of at least kind of 12 to 24 months behind. And then there are a range of 1047R specific mutant selective inhibitors, which only target half of the population. And so I think we find ourselves to be ahead and differentiated from the current standard of care.

And last week, you presented updated dose escalation and expansion data in combination with fulvestrant at ASCO. What did you see as the key findings with regard to the updates? And how does it inform your view on the probability of success of the Phase III study?

Yes. The data we showed at ASCO was a continuation of a longer follow-on now, so 12.5 months' worth of median follow-on from data that we had presented before at SABCS, and in corporate updates. So the key was we'd already shown back in December of last year numbers that the class has not seen before. So we showed a PFS response rate and AEs that were just better than anything we've seen in the class. The key thing for us was just with a longer follow-up, could that data hold and be consistent. And that's exactly what we saw at ASCO last week now. So we showed in heavily pretreated patient population in the second line and the second line plus, a PFS of over 10 months. And in true second-line patients, we showed a PFS of 11 months. We showed a confirmed objective response rate across all PI3K-alpha mutations of 39%, and we showed in the subset of kinase domain mutations, a response rate of 67%. So these are numbers that are several fold greater than anything we've seen in the class before. And I think also very encouragingly, we show a very clean safety profile, very low rates of Grade 3 hyperglycemia, diarrhea, rash, stomatitis that have obviously plagued the nonselective inhibitors. And so I think what we were most excited about was the consistency of the data that held up with a much longer follow-up now over 12.5 months. That gives us great confidence to now start and run the Phase III.

And remind us why you see 5.5 months for PFS as the competitor benchmark?

The -- we're going head-to-head in the pivotal trial against capivasertib, AstraZeneca's AKT inhibitor, which is becoming the standard of care has off to a great start in its sales trajectory. And so that has become the standard of care in the field because of its perceived better safety profile. Although in the real world, we're starting to see now that, that may not be holding up. But in their pivotal trial, CAPItello-291, the subgroup analysis of patients that had already been treated with a CDK4/6 inhibitor that were PI3K-alpha pathway altered, the PFS in that group was 5.5 months. Now that included PI3K-alpha mutations, but also AKT and P10 mutations. We know actually the AKT and P10 mutations do actually better. So the 5.5 months may actually be an overestimate for true comparator line for us. But that's the benchmark. The numbers that we showed, obviously, 11 months, there's a significant benefit for RLY-2608 versus CAPI. And so we're encouraged that we feel that we'll have a good chance of being successful.

And for the Phase III trial, could you speak to the population that you will evaluate and how you anticipate an initial label may look like?

Yes. So the population that we're going into is patients that have already been pretreated with a CDK4/6 inhibitor. So traditionally, that would be second line. But now obviously, we're seeing greater use of the CDK4/6 inhibitors in the adjuvant setting. And so we might see earlier and earlier use of RLY-2608. Although given the kind of uses has just begun in the Western countries, we imagine there'll be only a small number of patients that are adjuvant treated in our trial. But obviously, we want the label to reflect this because as you go out into the future, we imagine a much greater use of CDK4/6 inhibitors in the adjuvant setting. In terms of the kind of metabolic inclusion criteria, they're much more inclusive than some of the trials such as the INAVO120 trial that the approval of inavolisib. And so we're trying to offer this to a broader range of patients as we possibly can. So in summary, post-CDK4/6 patient population is what we will try and include in this.

And there's been some scrutiny around the need for a statistical -- statistically significant overall survival for oncology approvals. Just what gives you confidence here in your PFS primary endpoint for Phase III?

I mean there's a long track record of PFS being the approvable endpoint. All of the agents that we've seen in this class over the last few years have had PFS as their approvable endpoint. We know that there has been some speculation around how the FDA will approach this. It's probably not for us to speculate. All we can say is that we had a very successful engagement with the FDA. We will use PFS as our endpoint, but we'll also reserve alpha for overall survival. And so we think we feel confident around the design of having both endpoints.

And how are you thinking of the cadence that you will report additional data cuts from the Phase II study?

So I think we've just done that, exactly that, which is we reported data last September in a corporate update, and we showed data again from the same cut in December of last year at SABCS. And then I think we've just provided another update on the same data set back here at ASCO in June. So I think we've done what we can. This last update was really focused on the medical community. As we're about to start a global Phase III trial with a range of centers across the world, we want to make sure that this data is in the hands of medical professionals around the world. So it's unlikely that we'll now update this data. 12.5 months, it's relatively now well baked, and we don't see it really changing too much more. And so I think we'll probably provide no further guidance on if and when we'll update this data. I think what we may do in the future is provide a kind of full Phase I/II manuscript describes it all. But I think in terms of this data set, I think this is probably the last data set that we'll show and probably not guide to anything else.

And maybe speak to your strategy for potential frontline expansion through triplet combinations and when we might see that data?

Yes, I think we are very excited about trying to provide 2608 to patients along their kind of treatment journey. And so obviously, this first pivotal trial that we'll run will be in post-CDK4/6 treated patients. And so as we start to think about how we can move this in earlier and earlier lines of therapy, it does make sense for us to explore a range of combinations. And so I think over the last year, we've been exploring a triplet combination with 2608 plus fulvestrant plus ribociclib, which is the current standard of care. And then 2608 plus fulvestrant and then Pfizer's selective CDK4 atirmociclib. And so we're not guiding to when we'll show data, we'll wait until we have a kind of robust and interpretable data set, but this kind of dose exploration and combinability is the first step for us in terms of defining what the next regimen would look like as we think about going early.

And will you, I guess, when you look at these triplet combinations here, will you ultimately choose only 1 triplet combination to advance either the CDK4 or the 4/6 inhibitor?

Again, we're not guiding to exactly how and when we'll make this decision, but it does make sense that obviously, as we start to look forward to the next pivotal that we run that we will choose one of these regimens. In terms of how we'll make that decision, it's really just going to be based on the data, the combinability, the AE profile. I think we have great confidence looking at the inavolisib triplet that they did with palbociclib that this is a valid mechanism in early alliance. Obviously, at ASCO last week, we saw overall survival data for that triplet to be positive, and there's great excitement around it. I think with RLY-2608's profile of having a very clean safety profile and that obviously translating into efficacy, we think there is a position for it in early and earlier lines. In terms of what's the ideal regimen, these patients are going to be on treatment for a significant amount of time. And so the tolerability of this triplet is going to be important. And so obviously, the selectivity of 2608 is very helpful to that. And obviously, there is this theory that the CD -- selective CDK4s will also be more tolerable than the current CDK4/6s, taking away some of the kind of cytopenias that you see with the CDK4/6s. And so obviously, we have to see the data play out. But I think there is a real emphasis on the cleaner profile as possible as we start to stack these tolerabilities on each other.

What could the design of a potential frontline study look like in that context?

I think I still -- we're just going to follow the data. So I think on that one, it's probably too early to define exactly what that looks like. I think we are very focused on trying to make 2608 available to as broader a patient population as is possible. And so before we take that into account as we think about what the design will be.

And what about tumor types outside of breast here?

Again, PI3K-alpha mutations exist in a range of solid tumors. And obviously, we focused, and other developers are focused on hormone receptor positive/HER2- breast cancer, given it's such a large group of patients that are very well defined and identified. We know that other developers have started like Roche to look at triple-negative breast cancer. And so obviously, that could be an area of focus for us as well. And obviously, tumor types outside of breast cancer in general, colon, lung, I think all could benefit from this treatment, but probably not going to be a kind of short-term focus for us. I think given the focus on execution we have; it will remain focused on the pivotal trials that will run in hormone receptor positive/HER2- breast cancer.

You started clinical development in vascular malformations, driven by PI3K-alpha. And this is clearly a group that's very heterogeneous. You have varied manifestations. How are you thinking about which indications to initially pursue and the path to proof of concept?

So vascular malformations is a kind of very large unmet need. There's about 300,000 patients in the U.S. that have this umbrella condition named vascular malformations. Just over half of them, about 170,000 have a PI3K-alpha mutation, and there are about 4 different phenotypes that can be grouped. And I think for us, the kind of 2 phenotypes that we'll focus on now are PROS initially, PI3K-related overgrowth spectrum, and then a second much larger sector lymphatic malformations. There are about 80,000 of those and about 80% of them have PI3K-alpha mutation. So still very significant numbers, but those are the 2 areas that we'll focus on. The PROS group is where Novartis' alpelisib has the accelerated approval, and that's where they're generating commercial sales at the moment.

And is an accelerated approval pathway here feasible in the context of these diseases?

I mean, over the years, I've been into the FDA have always taught us never to speak on behalf of the FDA. And so all we can say is alpelisib today only has an accelerated approval. And their recent confirmatory trial, EPIK-P2, unfortunately, didn't meet the endpoints. And so we don't believe that, that will be converted anytime soon into a full approval. So I think all we can do is go full speed ahead at generating proof-of-concept data, and then check in with the FDA, both the start of the pivotal and the submission of the NDA. But nothing today would say that the pathway of accelerated approval is off the table.

What about diagnosis of these patients? Are they currently being diagnosed? And so you have this pool of patients you go into? Or is there going to need to be a significant amount of identification and education on your side?

I mean I think it's an evolving kind of nascent field. And so unfortunately, the manifestation of these patients is very broad in terms of just the phenotype. And obviously, they present their primary care physician. And from there, depending on the severity of their condition, they end in various different referral centers. But there are only a small number of kind of vascular malformation centers in the U.S. and in kind of the major geographies across the world. And so I think, yes, there will be some education required. But in terms of for a company like us to deal with commercialization, given the kind of small number of centers that these patients do end up at, it is actually going to be quite manageable. And given the large number of patients here, 300,000, we do think it is actually a very attractive place for a company for us to operate.

Touching on your out-licensed selective FGFR2 inhibitor, can you provide an update on how the development is progressing here with your partner?

Yes. As you may remember, we out licensed this program, our FGFR2, lirafugratinib to Elevar late last year. And they've been a great partner to work with. They are fully focused on getting this in the patient's hands across the world as rapidly as possible. And so I think they've been publicly stating that they will file an IND, hopefully, late this year or early next year. And so they've been a great partner to work with, and I think, we'll continue to do everything we can to help them file that NDA.

You also have these Fabry and NRAS programs that you laid out in an R&D Day, but you're clearly -- you put it on the sidelines for now based on your resource allocation strategy. Walk us through, a, kind of the -- your interest in these programs; but b, what you think will end up playing out and could partnership be an opportunity for one or more of them?

Yes. I mean we are very excited about both of these programs. The NRAS-selective program, I know that the whole industry has been working on trying to provide a NRAS-selective inhibitor, and we've been able to create one. And obviously, it's a good scientific discovery. The utility of the NRAS inhibitors could be in a broad range of solid tumors, probably focusing initially on melanoma. So we feel very good about the potential patient population for these and the same for Fabry. Galafold from Amicus has shown great promise over the years and obviously generating significant revenues. But as many of you know, it only serves a part of the population. And it has a range of efficacy within that patient population. So if you could just get to a broader range of the mutations and make them more amenable, we think that we could benefit a broader range of these Fabry patients that are currently underserved or not served at all. So I think we feel great about both programs. Now obviously, we sit here in 2025, in a very tough capital environment. And so I think we've done the prudent thing here and taken what we have is a very extensive balance sheet. We have $710 million at the moment and make sure that we can generate as much value in the medium term as we can. And so that's why you see us extend cash into 2029, which we believe will be well beyond the top line readout from the Phase III we're about start, allow us to generate proof-of-concept data for RLY-2608 in vascular malformation, allow us to generate the dose exploration work that we'll do with triplets and define an earlier line pivotal trial for RLY-2608 in breast cancer. And so we'll bring both of these programs that we've talked about here, the NRAS-selective and the Fabry program to IND, and then look for options. And those options could be that things are progressing much faster than we imagined in the programs that we've just talked about and allow us to bring them in the clinic ourselves, or as you rightly point out, look for partners. But we are very excited about the programs that we have. And obviously, we have this still research footprint that's focused on trying to solve some very hard problems.

And how about your manufacturing footprint at this point? Just as you look at these pivotal trials, your ability to then supply commercially.

Again, the great thing about all the molecules that we work on small molecules. And so the manufacturing is something that we've thought a lot about, it's all entirely outsourced. And so we can flex up and we've already started to think about the commercial supply for RLY-2608, have to think about launch later this decade now. As you know, it's not much of this decade left. And so we have to start thinking about it. But it's a much clearer problem because it's a small molecule. And so I think we feel good about our ability to manufacture at scale.

And how do you think about the field at this point, this motion-based design? Or the use of various AI/ML tools to create drugs. Just speak to how you stay at the forefront of what's playing out from a technological standpoint.

Yes. I mean those of you who have followed us over the years, we're the biggest skeptics of this. And that's because every day, our scientists are kind of at the cold face working with thousands of different problems. And so we've always found over the years that you have to really find individual discrete granular problems, and then use these approaches to make those problems just slightly easier than they were prior. There's no magic button here where you can push and suddenly it provides you with an inhibitor. And so for us, some of the kind of hype and hubris that has been around over the years, has not unfortunately played out. We see this as a very complex task, making a medicine. And so the problems that we face is slightly different in every time that we approach a program. And so we stay ahead by just continuing to work on hard problems, and see what works and what doesn't work. And over the years, we've worked on many new computational approaches that have kind of fallen by the wayside. And I think over the last year or so, we've been able to hone that down onto the techniques and programs where we think it will going to have the highest impact. And I think we have to hold ourselves accountable. These companies should only be judged on their output. And over the kind of 10 years that we've been around, we've generated now many INDs, multiple clinical [Technical Difficulty] programs, and then multiple proof-of-concept data sets. And hopefully now, we'll be closing to filing an NDA for lirafugratinib [Technical Difficulty] trial for RLY-2608. So we think that's really the only measure. And any company that's talking about data, like how much data they have and how many preclinical programs they've generated. We don't think that's the right measure. And the right measure is how many drugs have you got approved?

And the last question here, what are you focused on from an execution standpoint in the near term? And is there anything you want to touch on with regard to strategy or the portfolio that we didn't speak to?

No, I think we've kind of covered the portfolio pretty well. As you rightly pointed out, been able to hone down our focus to very tangible clinical data that we want to generate over the coming years. And in terms of execution, that's all we're focused on there is standing up this pivotal trial, opening sites across the world for our ReDiscover-2 trial, generating awareness amongst the medical community, and then generating this data, and then making sure we're ready to file an NDA and then commercialize. So the entire company is entirely focused on that.

Great.

Excellent.

Well, with that, thank you so much.

Thank you. Thank you, Salveen, and thank you to Goldman. Thank you.