IDYA - Ideaya Biosciences Stock: An Opportunity Missed (Rating Downgrade)

2023-12-05 15:01:27 ET

Summary

• Ideaya Biosciences uses synthetic lethality to target cancer cells and has seen its stock double since March.
• Synthetic lethality can selectively target cancer cells while sparing normal cells, offering a promising therapeutic strategy.
• Ideaya's lead molecule, Darovasertib, has shown strong proof of concept data in metastatic uveal melanoma, addressing a high unmet need.

Ideaya Biosciences, Inc. ( IDYA ) uses synthetic lethality to target cancer cells. I covered this one in March with a BUY rating. The stock has more than doubled since then.

Synthetic lethality is a concept in genetics and molecular biology that refers to a situation where the combination of two genetic or molecular events, neither of which is lethal on its own, results in cell death or impairment. In other words, when two non-lethal genetic or molecular changes occur simultaneously, the combination becomes lethal to the cell.

This concept is particularly relevant in the context of cancer research and drug development. Synthetic lethality can be exploited as a therapeutic strategy to selectively target cancer cells while sparing normal cells. If a cancer cell already has a mutation in one gene, targeting a second gene that, when mutated, would be synthetically lethal with the first mutation, can lead to the death of the cancer cell. Normal cells, which do not have the first mutation, remain unaffected.

IDEAYA’s lead molecule is Darovasertib, which has shown strong proof of concept data in metastatic uveal melanoma, or MUM, a highly difficult to treat cancer with a high unmet need. This high unmet need is twofold; first, while uveal melanoma is quite curable, very few treatments exist for the metastatic form; and two, the one treatment that is approved for MUM, tebentafusp, known as Kimmtrak, only targets HLA-A*02:01-positive patients, who constitute only 45% of the total patient population. There is also a third unmet need - at least in the trial, the numerical difference between tebentafusp and control in the phase 3 trial was small; 1-year overall survival benefit for tebentafusp was 73% compared to 59% for the control. PFS improvement was minor, and there was hardly any improvement in ORR.

Compared to that, initial data showed a 31% ORR in all-line patients and 50% in first-line (tebentafusp had 4.7%), while media PFS was 5 months compared to the 2.8 months seen in tebentafusp.

A month after my article, IDYA published interim data from this trial, and in October, they came out with top line data . There was a 60% confirmed ORR% by RECIST 1.1 in HLA-A2(+) in 1L MUM, and 42% confirmed ORR% by RECIST 1.1 in HLA-A2(-) in 1L MUM. This shows the objective response rate ((ORR)) based on Response Evaluation Criteria in Solid Tumors ((RECIST)) 1.1 for patients with melanoma (MUM) in the first-line treatment was higher in patients with a specific genetic marker (HLA-A2 positive) compared to those without it.

Data also showed a median PFS of 7.1 months in 1L MUM and 11 months in hepatic-only MUM, which means that the median PFS was shorter for all first-line MUM cases compared to cases where the melanoma is confined to the liver only. It was also seen on further follow-up that ~30% of any-line MUM treated for over one year and multiple PRs on treatment >2 years, with potential for further enhancement with ~20% of patients ongoing treatment. This suggests that a significant proportion of patients receiving treatment for melanoma for more than a year have shown positive responses (partial responses or PRs), and some have maintained these responses for more than two years. There is also potential for further improvement in outcomes for patients currently undergoing treatment.

The company noted that historical ORR% and median PFS by other therapies in MUM have ranged from 0% to 5% and 2 to 3 months, respectively, which provides a benchmark for darovasertib, and indicates potential best in class profile. Data also showed a high molecular response rate, specifically in circulating tumor DNA (ctDNA), for patients treated at any line (regardless of prior treatments) for melanoma. Of the 149 patients tested for HLA-A2 status, a majority tested negative for it. For a specific subset of patients with GNAQ/11 cutaneous melanoma treated with a combination therapy involving darovasertib, 50% showed partial responses based on RECIST 1.1, and these responses persisted for around 600 days. In a specific cohort undergoing neoadjuvant therapy with darovasertib for eye preservation before surgery (enucleation), 50% of evaluated patients were able to preserve their eyes until they received the maximal benefit from the treatment.

The company began a Phase 2/3 registrational study, and first patients have been enrolled.

Besides the lead program, the company began a phase 1/2 study with IDE397 (MAT2A) and AMG 193 (PRMT5MTA) in MTAP-deletion solid tumors in partnership with Amgen. Enrollment has started. An IND was cleared for GSK-partnered GSK101 (IDE705) Pol Theta Helicase inhibitor ($7.0 million milestone), and a development candidate was selected for Werner Helicase Inhibition ($3.0 million milestone).

Financials

IDYA has a market cap of $2bn and a cash balance of $510mn. These funds were supplemented by $134.7 million in estimated net proceeds from a follow-on financing on October 27, 2023, and $10.0 million in milestones achieved from the GSK collaboration. This was the second round of financing for the company in the last few months. Research and development (R&D) expenses for the three months ended September 30, 2023, totaled $33.7 million, while general and administrative (G&A) expenses were $7.9 million. At that rate, the company has a cash runway of 10-12 quarters.

The stock has very high institutional ownership at 85%, with no retail presence. Key holders are BVR, BlackRock and Federated Hermes. There are a few insider sells and no buys.

Bottom Line

Ideaya Biosciences, Inc. looks like a solid company with a multi-pronged approach, with many molecules running through various stages of testing. Early data so far from the lead program has been promising - in fact, quite outstanding - and this was an attractive buy when I called it out in March. Right now, though, the Ideaya Biosciences, Inc. stock price is stuck near 52-week highs, and I am feeling too wary this morning to take the leap of faith.

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