- Relay Therapeutics, a Cambridge, Massachusetts-based biotech five months removed from raising nearly half a billion dollars, on Monday announced a licensing deal with Roche that will give it another $75 million and a large pharma partner for one of its lead drugs.
- The alliance, Relay's first, grants Roche rights to RLY-1971, a targeted cancer drug designed to block a protein that's thought to play a key role in the growth and survival of certain tumors. Along with the upfront payment and another $25 million in near-term cash, Roche is pledging between $410 million and $695 million in additional payments should RLY-1971 meet certain, unspecified milestones.
- Roche plans to study RLY-1971 in "multiple" combination studies, in particular with an early-stage drug the Swiss pharma's Genentech unit is developing to block KRAS, another cancer-linked protein that's of intense interest to drugmakers.
This year, Relay has begun to reveal more of what it's been working on since it launched in 2016 with just over $50 million and a pitch to "bring protein motion to the heart of drug discovery."
Much of the past three decades of drug research and development has involved understanding the shape, and function, of proteins implicated in disease. Vertex, for example, famously championed "structure-based" drug design as a more informed and efficient way to uncover would-be medicines, an approach that quickly became commonplace. In recent years, drugmakers have turned to new technologies like machine learning to help.
Relay is a bet that going one step further, and tracing the movement of proteins as they twist and turn through different shapes, can unlock new ways of designing drugs. With the help of a supercomputer custom built by D.E. Shaw, and an array of drug-hunting tools, Relay has advanced its first slate of experimental drugs, a trio of targeted cancer medicines.
RLY-1971, the focus of the Roche deal, targets a protein called SHP2. Relay scientists discovered that a looping strand of SHP2 twists over the spot at which a drug would bind and inactivate the protein. Mapping that motion allowed the company's researchers to identify a compound that they claim more stably sticks to and inhibits SHP2.
Roche seems to agree, choosing Relay's candidate as a partner for its experimental KRAS-blocking drug. Long considered "undruggable," KRAS plays an important role in the development of many lung, colon and pancreatic cancers.
Building on new research that discovered ways to target certain KRAS proteins, Amgen, Boehringer Ingelheim, Johnson & Johnson and Mirati Therapeutics have also advanced experimental inhibitors, with Amgen's the most advanced.
In a conference call Monday, Relay executives touted Roche's expertise in cancer drug development, along with its large portfolio of other potential partner therapies, as key reasons for choosing to work with the Swiss drugmaker.
"The choice came down to which option was going to give us the speed, scope and scale that we were looking for for our medicine. And Genentech was the ideal partner," said Sanjiv Patel, Relay's CEO, referring to the Roche subsidiary.
Pairing KRAS drugs with SHP2 inhibitors is fast becoming a popular development strategy. Novartis is working with Mirati; Sanofi is partnered with Revolution Medicines; and AbbVie is collaborating with Jacobio Pharmaceuticals on similar drug combinations.
Per deal terms, Relay retains a right to "opt in" to a 50/50 split of future development costs and profits on RLY-1971. Should it choose to do so, the milestone payments on offer from Roche would total up to $410 million. If not, Roche would be on the hook for as much as $695 million.
Relay executives suggested Monday the company is likely to opt-in. "We're excited to have that option and it's something that we anticipate is a likely outcome that we would opt in over the next 12 to 24 months," said Peter Rahmer, head of investor relations at Relay, on Monday's conference call.
With the upfront cash from the deal, Relay will have roughly $800 million in cash reserves, enough to fund its planned operations through 2024. An initial public offering in July raised $460 million before deducting for underwriting and other expenses.
In addition to RLY-1971, Relay is developing two other targeted cancer drugs.
Shares in Relay fell nearly 10% in Monday morning trading on news of the deal, but at about $45 per share, the company's stock is still worth more than double its IPO price. .