# Relay Therapeutics S-1

Relay Therapeutics is a clinical stage small molecule drug development company based in Cambridge, founded in 2015 to utilize protein motion screening assays for precision medicine. The company IPOed in July 2020, raising $400 M at a valuation of roughly$1.8 B. The company is interesting to me because it is yet another tech enabled screening platform, but one that was partially invented by those at D.E. Shaw Research. It also seems to me like the closest thing to a real pharmaceutical platform company that isn’t untractable to analyze. Reading S-1 filings has been a good exercise to begin to understand the work being done at the cutting edge, and also to read the closest thing to a publicly released comprehensive narrative of a company’s prospects.

### Overview

The company is the brainchild of 4 superstar scientists, Dr. Mark Murcko, Dr. Matt Jacobson, Dr. Dorothee Kern, and Dr. David E. Shaw, all leaders in the field of computational drug design. The platform they developed, termed ‘Dynamo’, allows the development of drugs for protein targets based on their motion and changing state through time. The idea is that conventional drug development tools such as structure based drug design (championed by Murcko at Vertex), relies on static images of proteins, which is different from the behavior of proteins in their natural state, which is more dynamic. By understanding how proteins change shape through time, Dynamo allows motion based drug design for the synthesis of new molecules with improved specificity and selectivity. This work has been catalyzed by immense progress in computation, with Dynamo being supported by the Anton 2 supercomputer, a special built computer for molecular dynamics owned by D.E. Shaw Research.

Relay’s total operating expenses grew from roughly $50 M in 2018, to$84 M in 2019, to $138 M in 2020 (with$83 M in 2020 revenue). Operating expenses for 1st 3 months 2021 were $42 M compared to$26 M in 2020. As of March 31st, Relay has $742 M in total assets, with$263 M of that being cash. Link to latest 10-Q

### Clinical Programs

Importantly, Relay focuses on indications with low biological risk (ie. it is clear that the target proteins influence disease pathology), and low clinical execution risk (ie. patient subgroups are easily stratified using companion molecular diagnostics.). With such a strategy, the company currently has 3 lead programs in precision oncology, RLY-1971 for SHP2 dependent solid tumors, RLY-4008 for patients with FGFR2-mediated cancers, and RLY-PI3K1047 for PI3Kα H1047X mutants.

#### RLY-1971

This program is an oral small molecule inhibitor of the protein tyrosine phosphatase (opposite of a kinase) Src homology-2 domain-containing protein tyrosine phosphatase-2 (SHP2) that binds the protein and stabilizes it in its inactive conformation. Relay believes that “inhibition of SHP2 could block a common path that cancer cells exploit to avoid killing by other antitumor agents, thus overcoming or delaying the onset of resistance to those therapies.” Given the range of cancers that SHP2 seems to be involved in, Relay believes that RLY-1971 could become a ‘backbone therapy’, meaning that it could be a relatively safe starting point onto which other drugs can be built on for combination.

SHP2 is involved downstream of other common RTK targets pictured above, and thus represents a common node to address bypass resistance, a phenomena where cancers will evolve mutations to reduce dependency on a particular pathway targeted by a therapeutic. For example, MEK inhibitors can fail after tumors shift growth factor signaling to alternate RTKs to reduce sensitivity to such therapies. As a result, Relay has successfully demonstrated synergies between their SHP2 inhibitor and other targeted therapies targeting KRAS and ALK.