Relay Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; compared with Q1 2023. Amounts below are in U.S. dollars unless noted. Relay is a clinical-stage precision-medicine company with no approved products and no product-sales revenue.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| License and other revenue | $10.0 million | $0.2 million |
| Research and development expense | $82.4 million | $82.8 million |
| General and administrative expense | $19.8 million | $19.6 million |
| Operating loss | $90.4 million | $101.2 million |
| Net loss | $81.4 million; $0.62 per share | $94.2 million; $0.78 per share |
| Operating cash used | $50.3 million | $67.1 million |
| Cash, cash equivalents and investments at period-end | $749.6 million | Not provided here on a comparable basis |
Q1 2024 revenue primarily reflects a $10.0 million Genentech milestone payment. Interest income was $9.0 million, up from $6.9 million, and helped reduce net loss. The company remains loss-making; profit margins are not meaningful in the absence of product sales.
At March 31, 2024, cash and cash equivalents were $152.9 million and investments were $596.7 million. Current assets were $770.1 million versus current liabilities of $37.1 million. The company reported no debt outstanding. Total liabilities were $95.7 million, including operating lease liabilities and contingent consideration. Accumulated deficit was $1.482 billion.
Cash, cash equivalents and restricted cash increased $9.1 million during the quarter. Financing provided $48.9 million, including $29.8 million net proceeds from a private placement and $17.9 million net ATM proceeds; operations used $50.3 million. Shares outstanding increased to 132.3 million from 127.5 million at year-end 2023.
Material changes and business developments
- Net loss improved by $12.9 million year over year, reflecting higher collaboration revenue and interest income, alongside slightly lower total operating expenses.
- R&D expense was broadly stable. Clinical-program external costs were $24.3 million versus $25.0 million; platform and preclinical external costs declined to $17.4 million from $20.8 million, while employee-related expense rose to $33.5 million from $30.5 million. Management attributed the overall change primarily to pipeline prioritization.
- Revenue included a Genentech milestone for migoprotafib (GDC-1971). Through March 31, 2024, the filing reports $121.8 million in total consideration under the agreement and eligibility for up to $675.0 million in additional specified milestone payments, plus tiered royalties, subject to agreement terms.
- Relay sold 2.5 million shares in the January private placement at $12 per share and 1.9 million shares through the ATM at a weighted-average $9.73 per share during Q1.
Outlook, management commentary and risks
- Management estimates that the $749.6 million of cash, cash equivalents and investments at quarter-end will fund planned operating expenses and capital requirements into the second half of 2026. The estimate depends on assumptions that may prove incorrect; management says additional financing will be needed in the future.
- The financial-statement note states existing resources are expected to fund operations for at least one year from issuance of the statements. The MD&A gives the more specific runway estimate of into H2 2026.
- Pipeline includes clinical-stage RLY-2608, lirafugratinib (RLY-4008) and migoprotafib (GDC-1971), plus more than seven discovery-stage programs. RLY-2608 dose-expansion and combination cohorts are underway. Enrollment in the ReFocus lirafugratinib trial was closed to allow data to mature and inform future development decisions. Management characterized disclosed clinical data as preliminary.
- Key risks include clinical-trial failure, delay or enrollment challenges; safety and regulatory uncertainty; reliance on third-party trial and manufacturing providers, including single-source suppliers; competition; and the need for additional capital, which could dilute shareholders or require program reductions.
- The ZebiAI contingent milestone liability was remeasured down by $1.8 million in Q1, reducing reported expense; the valuation depends on milestone probability and timing assumptions and may change. Unrealized investment losses of $1.0 million were attributed to interest-rate changes, not credit losses.
- Management reported disclosure controls and procedures were effective as of March 31, 2024, and no material change in internal control over financial reporting during the quarter. No material litigation was reported.
Important facts for investors to verify
- How the next RLY-2608 and lirafugratinib clinical updates compare with the preliminary efficacy, safety and tolerability commentary, and what trial timing management expects.
- Whether the stated cash runway into H2 2026 remains supportable as trial costs, pipeline priorities and financing needs evolve.
- The terms, timing and likelihood of future Genentech milestones and royalties; the $675.0 million is potential, contingent consideration, not committed revenue.
- Future ATM or other equity issuance, resulting dilution, and the fully diluted share count, including potential ZebiAI milestone shares.
- Changes in R&D spending and pipeline prioritization, including the consequences of deprioritizing RLY-5836.