Topline Summary
Ideaya Biosciences, Inc. (NASDAQ:IDYA) is a cancer-focused biotech with a deep pipeline of different agents across various malignancies. One could make the case that their most important near-term prospects hinge on the success of their PKC inhibitor darovasertib in uveal melanoma, but they’ve also recent announced an important data readout for their second-in-line pipeline project, which is driving substantial interest in the company’s stock.
Today, I want to take a first look at IDYA and consider its merits and potential as an investment, providing context for the darovasertib program as well as for their MAT2A inhibitor for lung and bladder cancer.
Ideaya Biosciences Pipeline Overview
Darovasertib
The management of advanced uveal melanoma is an interesting hodgepodge of surgery, liver-directed therapy, and, more recently, immunotherapy in the form of Immunocore’s tebentafusp (for the patient with the right HLA match).
However, from the perspective of experts in the field, one of the more exciting prospects for uveal melanoma is being able to take advantage of mutations in GNAQ/GNA11, which are present in the vast majority of cases of uveal melanoma.
IDYA’s most advanced drug project is darovasertib, a protein kinase C inhibitor being investigated to exploit this reliance on GNAQ/GNA11 mutations. Last year, the company presented encouraging findings from a phase 2 study combining darovasertib and crizotinib in patients with metastatic uveal melanoma, showing a 42% confirmed objective response rate with the combination and a median progression-free survival of 7.1 months (11 months in patients whose metastatic disease was limited to the liver).
These findings suggest that the activity of darovasertib-crizotinib dwarfs other agents that have been tested in this setting, most notably with immune checkpoint inhibitors showing response rates under 5%. Even tebentafusp, the only approved immunotherapy for metastatic uveal melanoma, had a response rate of only 9% in its pivotal phase 3 study.
More recently, at the ASCO Annual Meeting, IDYA shared findings from an investigator-sponsored trial of darovasertib as neoadjuvant (before surgery) therapy for localized uveal melanoma. Of the 12 patients treated with darovasertib, 9 (75%) were able to avoid surgery, and 8 had tumor shrinkage above 30%. IDYA is planning to meet with the FDA to discuss a pathway to approval for the drug in this setting.
IDE397
A newer pipeline candidate for IDYA is IDE397, an inhibitor of a protein called MAT2A. This enzyme plays a key role in cell growth in the presence of disruption of a different enzyme called MTAP. Targeting MAT2A in this context has been shown to be synthetically lethal for cancer cells, drawing some interest in this approach as therapy for different cancers.
Notably, MAT2A is deleted as a byproduct of chromosome 9p21 loss, which itself occurs in around 15% of solid cancers. This presents a relatively common targetable aberration, if indeed MAT2A is shown to be druggable in clinical trials.
Therefore, the recent announcement of positive phase 2 data for IDE397 has generated substantial market interest in the pre-market for July 8 (as I write this). IDYA divulged that IDE397 used alone yielded a 39% response rate among 18 evaluable patients with MTAP-deleted NSCLC or urothelial cancer (the latter being the most common form of bladder cancer). Almost all (94%) of the patients achieved some measure of disease control. Treatment with IDE397 was well tolerated, as well, with a 5.6% rate of grade 3 or higher adverse events and no drug-related serious complications or treatment discontinuations.
To my knowledge, this is the first report of clinical exploitation of MTAP deletion in patients with any cancer, suggesting that IDYA is on the fast track to fill an important unmet need in oncology.
IDYA Stock Financials
As of their most recent quarterly filing, IDYA held $108.3 million in cash and another $590.4 million in short-term marketable securities. Notably, they had another $242.6 million in long-term investments as well. The operating expenses for the quarter reached $51.0 million, for a net loss or cash burn of $39.6 million after considering interest income.
At this cash burn rate, IDYA has an implied cash runway of approximately 5 to 6 years.
Strengths and Risks
Strength – 2 pipeline candidates showing strong signals of meeting high unmet needs
IDYA has demonstrated highly encouraging data on different fronts for darovasertib, a story that’s been building in furor for years now. In multiple settings, it’s looking more and more like this is an active agent in uveal melanoma.
Now, with the announced IDE397 findings, it looks like IDYA has another potential hit on its hands. This is an important diversification for the company’s pipeline, and it takes them into yet another realm of untapped potential. The announced phase 2 findings, along with the presence of a clear biomarker, all but assure Breakthrough Therapy designation and suggest that IDYA could pursue accelerated approval for the drug. The FDA loves to see when there is a clear biomarker informing which patients should get the therapy.
Bottom-Line Summary
IDYA has demonstrated clear evidence of activity for 2 agents in the solid tumor space, lending strong support to the investment thesis. Couple that with a rock solid financial position, and someone who would be tempted to buy into the company today can rest pretty easy knowing that their investment won’t be diluted in the near term, or be subject to any outsized risk of failure due to clinical trials.
My main reservation with IDYA at this time is that the market has definitely taken notice, giving them a market capitalization exceeding $2 billion and placing them in line with other companies with massive pre-commercial hype. This valuation is more for maintaining entities that have a drug approved and are executing on sales, which means that a lot of forward success is already baked into the share price.
While it’s not possible to predict where the Ideaya Biosciences, Inc. valuation will trend, in my mind, it would be very reasonable to expect that the share prices we’re seeing today represent a local maximum, and there will likely be a more favorable buy-in time down the road as IDYA enters lulls. For that reason, my sentiment currently is a “Hold,” but I would not blame someone for entering into a modest position even at these price points, given that IDYA has 2 pipeline programs showing success, with all the potential for approvals and possible buyout situations that clinical success could entail.
The long-term story here is very positive, but I think there will be an opportunity that’s a little better than what you’re seeing today, as the stock is poised to reach $40 per share. I am an optimist long term, but for right now I would recommend to “Hold” and watch this one with interest.
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