An early look at an ongoing study hints at the value of the company’s unique approach.
An emerging crop of drug developers is using artificial intelligence, machine learning, and sometimes supercomputers to design safer and more effective drugs. Data from human patients remains scarce, non-existent, or hardly unique compared to more traditional drug development approaches. There’s a healthy dose of skepticism among analysts and industry titans.
The latest update from Relay Therapeutics (RLAY) – Get Relay Therapeutics Inc. Report provides early validation for a technology-enabled approach. At the very least, the preliminary data published ahead of an important scientific meeting shows the promise of the company’s unique strategy to design more selective drug candidates.
Shares ended the day up around 20%.
True Precision Medicine Shows Promise
Relay Therapeutics published an abstract discussing new data for its lead drug candidate, RLY-4008, ahead of the European Society for Medical Oncology (ESMO) Congress 2022. The preliminary data suggest the asset could nearly double the response rate of treatments available to patients today, avoid worrisome side effects, and possibly lead to deeper responses over time.
The experimental treatment is being evaluated in an ongoing phase 2 clinical trial for individuals with a rare liver cancer called cholangiocarcinoma (CCA). More specifically, the study enrolled patients whose tumors had alterations in the FGFR2 gene and who had never been treated with drugs that block FGFR proteins.
Relay Therapeutics designed RLY-4008 to be selective for FGFR2. That’s important because there are multiple proteins in the FGFR family. Drug compounds that inhibit FGFR1 cause elevated phosphate levels in the blood, while those that inhibit FGFR4 cause diarrhea.
There are multiple FGFR inhibitors on the market today, but none are selective for only FGFR2. These approved and soon-to-be approved treatments caused elevated phosphate levels and diarrhea in at least 90% and 24% of patients, respectively.
Investors may think of safety and efficacy as two separate measures of a drug candidate’s activity, but they’re closely related. If too many patients have side effects, then they may need to reduce dosing or discontinue treatment altogether. Those individuals may not have a chance to respond to treatment that otherwise would’ve worked.
That’s why Relay Therapeutics is focused on designing more selective drug candidates. The preliminary data in the ESMO abstract suggest the approach is paying off:
Of the individuals who received the 70 mg dose, 88% (15/17) achieved a partial response or better. In this context, a partial response was defined as tumor shrinkage of at least 30%.All 15 responders remained in response and on treatment at the time of the data cutoff. It’s not clear if any had doses reduced, which was observed in an earlier study in some patients.All 17 individuals achieved disease control, which is defined as tumors that, at the very least, aren’t changing in volume from treatment initiation.Side effects weren’t discussed in great detail, but elevated phosphate levels and diarrhea were not listed among the most-common treatment-related adverse events. An earlier study found these side effects occurred in 14% and 10% of patients, respectively. Each may occur more frequently in the 70 mg dose range.
An objective response rate (ORR) of 88% is really impressive. For comparison, the highest ORR for any approved FGFR inhibitor is 36%. Another that seems likely to earn regulatory approval raised the bar to 42%.
Investors shouldn’t expect the ongoing phase 2 study to end with an ORR of 88%, but there’s plenty of wiggle room to dominate the competitive landscape.
Can This Novel Approach Keep Paying Off?
Relay Therapeutics has a differentiated approach to drug development. It combines artificial intelligence, machine learning, and a supercomputer to simulate how proteins move. This dynamic protein structure is then used to discover unique binding pockets on mutated proteins, which can allow the company to design drugs that are hyper-selective for the disease-driving protein.
A steady stream of encouraging updates from the lead drug candidate suggests the company is on the right path. These data could help RLY-4008 snag the coveted Breakthrough Therapy designation from the FDA, which would speed up review of a future regulatory filing. Regulators are already allowing the phase 2 study to take the place of a phase 3 clinical trial, and will accept mid-stage data for approval.
Investors should be excited, but still remain grounded.
The specific patient population in the study above is relatively small, representing less than 1,000 new cancer diagnoses in the United States each year. Meanwhile, an estimated 8,000 to 20,000 tumors with any FGFR2 alteration emerge in Americans each year. That’s also relatively small and requires a handful of additional studies, some of which are ongoing.
In other words, RLY-4008 is well-positioned for eventual approval, but will only generate moderate revenue for the company.
Most important, it represents a potential step change in patient outcomes by leading to better responses and fewer side effects. Investors can view RLY-4008 as an early validation of the company’s unique approach to drug development. If dynamic protein structure leads to successful drug candidates across the pipeline — especially in larger market opportunities — then Relay Therapeutics could grow into a much larger company. Just remember it will take time to earn a durably higher valuation.
