From AI to PI3Kα: Lemonade’s Sweet Surge & Relay’s High-Stakes Wait

Taking a Look at Lemonade (LMND) & Relay Therapeutics (RLAY) Earnings Results.

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This week, we covered quarterly results from two companies across our coverage:

Lemonade (LMND): Squeezing Out Profits, Sweet Turnaround

Lemonade’s Q2 2025 results delivered its seventh consecutive quarter of accelerating growth and meaningful underwriting improvement. In-Force Premium (IFP) hit $1.083 B (+29% YoY), revenue grew 35% YoY to $164.1 M, and gross profit more than doubled to $64.3 M (+109% YoY) as the gross loss ratio improved 12 points to 67%. Positive operating cash flow of $6 M and $25 M in adjusted free cash flow signal the company may be approaching self-funding status. Management also made a bold strategic move — slashing its quota share reinsurance from 55% to 20%, retaining more premium and boosting future margins. The shift will phase in over several quarters but already prompted a guidance raise to $710–$715 M in 2025 revenue. Our updated IVT base-case fair value edges up to roughly $77.50/share (from $73), reflecting stronger-than-modeled growth, faster margin expansion, and reduced dilution risk.

Relay Therapeutics (RLAY): All Eyes on RLY-2608, Patience Is a Must

Relay’s Q2 2025 update was another “no drama” quarter — a calculated pause while funneling nearly all resources into its potential blockbuster PI3Kα inhibitor, RLY-2608, in breast cancer. Cash ended at $656.8 M with runway into 2029, a rare luxury for a mid-cap biotech. Operating expenses fell sharply YoY (R&D –31%, G&A –32%) thanks to cost cuts, keeping burn manageable even as the pivotal Phase 3 trial launched in Q2. Phase 1b data show strong efficacy (10.3-month median PFS, 39% ORR) with a favorable safety profile, and management is running a second trial in vascular malformations — potentially another high-value indication. Secondary assets remain paused or partnered, preserving capital. Our updated IVT model keeps the base-case intrinsic value at $12/share (partnered scenario), or $14 in a go-it-alone case. The market price (~$3) still reflects heavy skepticism; the setup remains binary, but with catalysts over the next 18–24 months, upside is compelling if execution stays on track.

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