Relay Therapeutics Gives Business Update
Taking a Look at Relay Therapeutics (RLAY) Earnings Report.
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Relay Therapeutics Reports Positive Interim Data on RLY-2608 and Provides Q3 2024 Corporate Update
Relay Therapeutics (RLAY) recently provided a business update for Q3 of 2024. Given that the company is a pre-revenue biotech with substantial cash reserves on its balance sheet, this update can be viewed as a non-event. The critical focus for RLAY at this stage is their upcoming data readouts, which are anticipated in the near future. Nevertheless, I will quickly compile an abstract of their financials.
Recent Key Highlights
Interim Data: RLY-2608 demonstrates a 9.2-month median progression-free survival (PFS) in heavily pre-treated patients with PI3Kα-mutated, HR+/HER2- metastatic breast cancer at the recommended Phase 2 dose.
Upcoming Trials: Plans to initiate a pivotal second-line trial of RLY-2608 combined with fulvestrant in 2025.
RLY-2608 (ReDiscover Study)
Doublet Therapy:
Reported interim data for RLY-2608 in combination with fulvestrant in patients with PI3Kα-mutated, HR+, HER2- metastatic breast cancer who had received at least one prior CDK4/6 inhibitor.
At the recommended Phase 2 dose of 600 mg BID, the combination showed:
A median PFS of 9.2 months across all mutations and 10.3 months among patients with kinase mutations.
An objective response rate (ORR) of 33% across all patients and 53% in patients with kinase mutations.
A favorable safety profile, with only two patients discontinuing due to adverse events and minimal Grade 3 hyperglycemia.
These data will be presented at the San Antonio Breast Cancer Symposium in December 2024.
Triplet Therapy Development:
CDK4/6 Inhibitor Combination: The dose-escalation study of RLY-2608 with ribociclib and fulvestrant is testing biologically active doses of RLY-2608. The aim is to identify a dose that can be combined with full-dose ribociclib. Expansion cohorts are expected to begin in the first half of 2025.
CDK4 Inhibitor Combination: A trial combining RLY-2608 with atirmociclib and fulvestrant is on track to initiate by the end of 2024.
Lirafugratinib (RLY-4008)
Presented updated data on FGFR2 fusion tumor-agnostic applications at the AACR-NCI-EORTC International Conference in October 2024.
Provided a regulatory update indicating that the FDA suggested first filing a new drug application (NDA) for cholangiocarcinoma, followed by a supplemental NDA for tumor-agnostic indications with additional patient data and follow-up.
Announced plans to seek a global commercialization partner for lirafugratinib to maintain focus on other pipeline programs.
Corporate Developments
Capital Raise: Secured $230M in gross proceeds through an underwritten follow-on public offering in September 2024.
Organizational Streamlining: Implemented changes to streamline the research organization, resulting in expected annual savings of approximately $50M and a workforce reduction of about 15%. This aligns with the company's shift toward a development-focused strategy in preparation for upcoming pivotal trials and new clinical programs in 2025.
Anticipated Upcoming Milestones
Breast Cancer Programs
Q4 2024: Initial safety data for RLY-2608 combined with fulvestrant and ribociclib.
End of 2024: Initiation of the clinical trial for RLY-2608 combined with fulvestrant and atirmociclib.
First Half of 2025: Launch of dose expansion cohorts for the RLY-2608, fulvestrant, and ribociclib combination.
2025: Initiation of the Phase 3 pivotal trial for RLY-2608 combined with fulvestrant in the second-line setting.
Pre-Clinical Programs
Q1 2025: Initiation of a clinical trial for RLY-2608 targeting vascular malformations.
Second Half of 2025: Clinical trial starts for programs addressing Fabry disease and NRAS mutations.
Financial Results
Cash Position: As of September 30, 2024, cash, cash equivalents, and investments totaled $839.6M, compared to $750.1M on December 31, 2023. The company expects this capital to fund operations into the second half of 2027.
Revenue: Reported no revenue for the third quarter of 2024, compared to $25.2M in the same period of 2023. The decrease is primarily due to the prior recognition of milestone payments from the collaboration with Genentech, Inc.
Research and Development Expenses: R&D expenses were $76.6M, down from $81.5M in the third quarter of 2023. The decrease reflects the prioritization of certain pipeline programs.
General and Administrative Expenses: G&A expenses were $19.8M, up slightly from $18.5M in the same quarter last year. The increase is mainly due to higher stock compensation expenses, offset by reductions in other areas.
Net Loss: The net loss for the third quarter of 2024 was $88.1M, or $0.63 per share, compared to a net loss of $65.7M, or $0.54 per share, in the Q3 of 2023.
My Take
As I mentioned earlier, these business updates don't carry much significance. We should focus on the cash reserves, since the company isn't generating revenue right now; however, we already know they have substantial cash on their balance sheet, enough to fund operations until the second half of 2027. In terms of valuation, the company is trading close to its cash balance, which is unreasonable for companies like RLAY that are valued based on the data from their pipeline candidates. Recently, they had an incredible readout for RLY-2608, and the stock soared. Management then strategically conducted a $230M offering, resulting in a boost to their cash reserves. In my opinion, this was a great move because it demonstrates management's confidence in the future, especially following the excellent data results.
Therefore, the company seems to be trading at unreasonable levels when we consider both their cash reserves and the valuable data from their pipeline candidates. RLY-2608 appears extremely favorable at the moment, and we should pay attention to this product because another readout is expected sometime in Q4 2024, with an advanced readout in the first half of 2025. If positive results are shown, the stock could skyrocket. Personally, I'm planning to find ways to accumulate more shares.