Relay Therapeutics, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual filing; the figures below are for the full year, not standalone fourth-quarter results. The company is a clinical-stage precision-medicine biotechnology business with no approved products or product sales.
Financial and operating performance
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $82.7 million | $0 |
| Research and development expense | $99.9 million | $70.3 million |
| General and administrative expense | $38.6 million | $13.7 million |
| Operating loss | $55.8 million | $84.0 million |
| Net loss | $52.4 million | $75.3 million |
| Operating cash used | $102.5 million | $66.1 million |
- 2020 revenue was entirely collaboration/license revenue under the Genentech agreement for RLY-1971; it was not product-sale revenue. The company recognized $82.7 million when it transferred the license. The filing’s transaction-price estimate was $85.9 million, including fixed and estimated variable consideration, with other amounts subject to performance or milestone conditions.
- R&D expense increased $29.6 million, chiefly from higher employee costs, including stock-based compensation, and external clinical and preclinical spending. G&A increased $24.8 million, largely reflecting stock-based compensation, headcount, insurance and professional fees.
- Net loss narrowed year over year despite higher operating expenses, mainly because of the license revenue. Interest income and other expense, net, declined to $3.4 million from $8.7 million.
- Net loss attributable to common stockholders was $230.2 million, or $5.40 per share, versus $75.3 million, or $21.82 per share, in 2019. The 2020 amount includes a $177.8 million deemed dividend from the modification and extinguishment accounting for Series C preferred stock; it is distinct from the reported $52.4 million net loss.
- Cash, cash equivalents and investments totaled $678.1 million at year-end. Cash and cash equivalents were $447.6 million and investments were $230.4 million. The company reported $799.8 million in total assets and $36.5 million in total liabilities, including $24.4 million of operating lease liabilities; it had no debt outstanding.
- Cash provided by financing was $426.5 million, primarily the IPO’s $425.3 million net proceeds. Investing activities provided $81.7 million, principally from investment maturities. Cash, cash equivalents and restricted cash increased $405.7 million.
Material changes and business developments
- Relay completed its IPO in July 2020, issuing 23.0 million shares at $20 per share for $425.3 million in net proceeds. Preferred stock converted into common stock at the IPO.
- In December 2020, Relay entered a global collaboration and license agreement with Genentech for RLY-1971. The $75 million upfront payment was collected in January 2021; it was recorded as a receivable at year-end. Relay was also eligible for $25 million in near-term milestone payments and, if it did not opt into a U.S. profit/cost share, up to $695 million in additional milestones and tiered low-to-mid-teens royalties, subject to terms and reductions. A 50/50 U.S. profit/cost-share option carries different economics.
- RLY-1971 and RLY-4008 entered first-in-human clinical trials in 2020. RLY-PI3K1047 remained preclinical. Relay reported five additional discovery-stage programs across oncology and genetic disease.
- The amended D. E. Shaw Research collaboration extended through August 2025 and raised its annual fee to $7.9 million beginning in 2020. The company reported $6.4 million of R&D expense under the agreement in 2020 and a $1.5 million amount due related to the Genentech transaction.
Outlook, commentary and key risks
- Management estimated year-end cash, cash equivalents and investments, together with the $75 million Genentech payment received in January 2021, would fund operations and capital needs into 2024. This is an estimate based on assumptions; the filing cautions that capital could be exhausted sooner. Relay expects substantial further spending and may need additional financing.
- Management expected an initial RLY-4008 clinical update in the second half of 2021, a 2021 combination trial of RLY-1971 with Genentech’s GDC-6036, and IND-enabling studies for a PI3Kα H1047X-selective inhibitor in 2021. These are forward-looking plans, not reported outcomes.
- COVID-19 had not halted enrollment in the two ongoing first-in-human trials as of the filing, but could disrupt enrollment, trial timelines, laboratory work, suppliers and contractors, and financing conditions.
- Key risks include the lack of completed clinical trials and approved products; uncertain translation of preclinical results; clinical safety, enrollment and regulatory risks; dependence on third-party manufacturers, CROs and single-source API suppliers; reliance on D. E. Shaw Research and its Anton 2 supercomputer; competition; and patent, collaboration and funding risks. Management stated that no litigation was then considered probable to have a material adverse effect.
- Relay recognized no income tax benefit for 2020 or 2019 because of uncertainty about realizing deferred tax assets. It reported a $404.2 million accumulated deficit and no product revenue.
Important facts for investors to verify
- Clinical trial enrollment, safety, dose selection and emerging efficacy data for RLY-1971 and RLY-4008, and progress of PI3Kα IND-enabling work.
- Timing and conditions for Genentech’s $25 million near-term payments; the remaining milestones and royalties; and whether Relay elects the U.S. profit/cost share.
- Cash burn, development spending and the assumptions supporting the stated funding runway into 2024.
- How collaboration fees, milestone obligations and any transaction-related payments to D. E. Shaw Research affect the economics of programs and partnerships.
- Patent prosecution and ownership protections for pipeline assets, including jointly developed intellectual property, as well as reliance on external manufacturing and clinical vendors.