Last Updated 2/24/2023
Relay is working on a suite of tools using physics based chemistry, computational modeling, AI and ML to discover drugs where many others have failed before. They use technologies to model proteins and enzymes in motion. Most people think of proteins as static structures that just fold based on electrostatic and hydrophobic forces. Proteins are actually very dynamic structures that perform functions and change their shape as they function. Relay is developing technologies to model proteins in motion so they can use other AI technologies to develop drugs against impossible targets. They will use AI to help screen targets and model the dynamics of these molecules for safety and efficacy. They use Machine Learning to screen thousands of possible drug candidates to pick the perfect ones that are worth moving into the clinic. They are using these technologies to take on some of the most toxic targets in Oncology.
I have been following Relay and Sanjiv Patel for over a year now. I think he is a very strong CEO. They have built a powerful technology platform from a combination of licensing and buying technology. He is out there telling the story at the conferences and does a good job at doing it. They even put up some early data that impressed investors to show they can handle the drug development process. It will still take time to see if they can manage all aspects of building a powerhouse biotech company.
RLY-4008 - Their first drug is for FGFR2 which is a target that previously had high levels of toxicity related to this drug class. Relay developed a FGFR2 inhibitor with significantly better efficacy and significantly lower toxicity than all drugs before it. They wowed investors with an 88% overall response rate in phase 1 data. The safety data was very impressive compared to previous drugs in this class. They are ongoing with phase 1.
RLY-2608 - This drug is for PI3Ka which has been a target of oncology in the past, but failed repeatedly due to toxicity related to glucose regulation. They made a major breakthrough here by targeting specific mutations in this protein that are not in the wild type. This allows them to specifically target just the mutants of the protein and leave the wild type untouched. Early safety data looked very clean. Now we need to see the efficacy data.
RLY-5836 - This is the second drug for PI3Ka. This is a different molecule with different metabolism and pharmacokinetics from RLY-2608. This is designed to be a second shot on goal for the massive market in PI3Ka.
CDK2 - This is their inhibitor of the Cyclin Dependent Kinase 2 which plays a role in the cell cycle. This would be a companion inhibitor to the CDK4/6 inhibitors in the Breast Cancer space.
ER Degarders is a protein degrader targeting the Estrogen Receptor. This is an extremely competitive space so only game changing data would be successful. I don't think it is impossible with their AI based program, but I will wait and see.
GDC1971 is their SHP2 inhibitor they are developing in partnership with Genentec. This is a very toxic target so I don't have very high hope for this program.
Cash $1.1 billion
FGFR2 I can see at least 10,000 patients depending on market share with their data. I would give it a $100,000 price which is low for these targeted therapies. That would be at least $1 billion potential. I would give them a 1 multiple for some phase 1 data. That puts this at a value of $1 billion.
PI3Ka is a huge indication with over 100,000 potential patients. I could see them getting at least 20,000 in the easy indications. I gave them a price of $150,000 which is average for targeted therapies. That is $3 billion potential. I would give this a .1 multiple since it still has no phase 1 data yet. That put the value at $300 million. So far I am including both PI3Ka assets in this valuation as they would compete with each other if they both make it to commercial.
CDK2 is a large indication with about 45,000 potential patients on CDK4/6 inhibitors. I could see them getting at least 10,000 in this indication. I gave them a price of $150,000 which is average for targeted therapies. That is $1.5 billion potential. I would give them a .1 multiple for early preclinical. That gives it a value of $300 million.
ER Degrader is a super competitive space where other protein degraders failed to show benefit over other drugs in this space. I would have to see some impressive data before I gave this program any value.
SHP2 could be over 100,000 patients, but it is a toxic target in this pathway. They partnered it 50/50 with Sanofi. I would give them $250 million because I am not sold on this target yet. I would give this a multiple of 1 since they have some phase 1 data so far. That puts it at a value of $250 million.
All in, that is a $2.95 billion market cap. Based on the 121.4 million shares outstanding, that comes to $24.29.
D.E. Shaw license. They license some technology for designing and developing drugs from this research institution. They are required to pay royalties on products they design using this technology.
Genentec partnership for SHP2. Relay has an opt-in right for 50% of the US if they chose to use it. The rest of the world has low to mid teens royalties which will apply to the US if they don't opt-in. They are entitled for up to $650 million in milestones.
RLY-4008 Phase 1 Dose Escalation Data at End of 1H 2023
RLY-4008 Phase 1 Pivotal Cohort Full Enrollment by End of 2023
RLY-2608 Phase 1 Ongoing Data Expected 1H 2023
RLY-5836 Development Candidate Selection
CDK2 Phase 1 Start Expected Q4 of 2023 or Q1 of 2024
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* These are my Opinions and Estimates. They should not be considered financial advice.