Relay Therapeutics(US:RLAY)2025-08-07 20:17PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company reported a net loss for Q2 and the first six months of 2025, experiencing a decrease in total assets while maintaining a strong liquidity position Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $113,941 | $124,287 | | Investments | $542,834 | $657,036 | | Total current assets | $680,392 | $809,204 | | Total assets | $728,841 | $871,296 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $32,525 | $50,729 | | Total liabilities | $63,183 | $93,504 | | Total stockholders' equity | $665,658 | $777,792 | | Total liabilities and stockholders' equity | $728,841 | $871,296 | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $677 | $0 | $8,355 | $10,007 | | Research and development expenses | $63,897 | $91,992 | $137,706 | $174,395 | | General and administrative expenses | $13,627 | $20,139 | $32,366 | $39,938 | | Loss from operations | $(76,847) | $(100,757) | $(161,717) | $(191,120) | | Net loss | $(70,375) | $(92,212) | $(147,440) | $(173,599) | | Net loss per share, basic and diluted | $(0.41) | $(0.69) | $(0.87) | $(1.32) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(128,471) | $(116,156) | | Net cash provided by investing activities | $117,611 | $56,081 | | Net cash provided by financing activities | $653 | $50,464 | | Net decrease in cash, cash equivalents, and restricted cash | $(10,207) | $(9,611) | Notes to Condensed Consolidated Financial Statements - The company is a clinical-stage precision medicine company with a lead product candidate, RLY-2608, in clinical development, having incurred net operating losses since inception, with an accumulated deficit of $1.9 billion as of June 30, 20253135 - The Genentech collaboration agreement was terminated effective January 7, 2025, resulting in no further milestone payments and $0 revenue from this agreement in the first six months of 2025, compared to $10.0 million in the same period of 20246971 - In December 2024, the company entered into an exclusive license agreement with Elevar Therapeutics for lirafugratinib (RLY-4008), recognizing $8.4 million in revenue from this agreement for the six months ended June 30, 20257275 - During Q2 2025, the company underwent restructuring, including terminating approximately 70 employees, ending its lease at 399 Binney Street, and executing a new lease at One Kendall Square, leading to a $2.3 million intangible asset impairment and write-off for assembled workforce808283 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the advancement of lead product candidate RLY-2608, highlighting decreased operating expenses due to strategic streamlining and a strong financial position expected to fund operations into 2029 - The company's lead product candidate, RLY-2608, is an allosteric, pan-mutant, and isoform-selective PI3Kα inhibitor, with updated interim data from the ReDiscover Trial showing a 10.3-month median progression-free survival (PFS) overall in patients with PI3Kα-mutated, HR+/HER2- metastatic breast cancer9799 - The company believes its existing cash, cash equivalents, and investments of $656.8 million as of June 30, 2025, will be sufficient to fund its operating expenses and capital expenditure requirements into 2029113162 Results of Operations Comparison of Operations for the Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | License and other revenue | $677 | $0 | $677 | | Research and development expenses | $63,897 | $91,992 | $(28,095) | | General and administrative expenses | $13,627 | $20,139 | $(6,512) | | Net loss | $(70,375) | $(92,212) | $21,837 | - The $28.1 million decrease in R&D expenses for Q2 2025 compared to Q2 2024 was primarily due to strategic choices to streamline the research organization and cost avoidance on lirafugratinib development following the Elevar Agreement134 Comparison of Operations for the Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | License and other revenue | $8,355 | $10,007 | $(1,652) | | Research and development expenses | $137,706 | $174,395 | $(36,689) | | General and administrative expenses | $32,366 | $39,938 | $(7,572) | | Net loss | $(147,440) | $(173,599) | $26,159 | - For the first six months of 2025, revenue of $8.4 million was recognized from the Elevar Agreement, while in the same period of 2024, $10.0 million was recognized from the now-terminated Genentech Agreement139 Liquidity and Capital Resources - As of June 30, 2025, the company had $656.8 million in cash, cash equivalents, and investments144 - Recent financing activities include a new 'at-the-market' (ATM) sales agreement for up to $250.0 million established in August 2024, though no shares have been sold under it as of June 30, 2025, with a prior ATM agreement terminated in August 2024104149151 - In January 2024, the company received $29.8 million in net proceeds from a private placement of 2,500,000 shares of common stock105152 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its investment portfolio, with a hypothetical 100 basis point adverse movement not expected to have a material impact, and foreign currency risk considered immaterial - The company's primary market risk is interest rate sensitivity on its cash and investment portfolio, which as of June 30, 2025, consisted of money market funds, U.S. treasury bills, and U.S. agency securities174 - Foreign currency exchange risk is minimal as operations are located in the United States and expenses are generally denominated in U.S. dollars176 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The company's CEO and CFO concluded that as of June 30, 2025, the disclosure controls and procedures were effective at a reasonable assurance level178 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls179 PART II. OTHER INFORMATION Legal Proceedings The company is involved in a derivative lawsuit alleging excessive director and officer compensation and breach of fiduciary duty, with the outcome currently unpredictable - A derivative complaint was filed against certain directors and officers on December 18, 2024, alleging excessive board member compensation for the years 2021-2023182 - The claims include breach of fiduciary duty, unjust enrichment, and waste of corporate assets, with the company unable to predict the outcome or potential loss related to this matter182 Risk Factors The company faces numerous risks, including those related to its limited operating history, product candidate development, reliance on third parties, funding, intellectual property, and market factors Risks Related to Our Product Candidates - The company has never successfully completed any large-scale, pivotal clinical trials and faces a lengthy, expensive, and uncertain product development process184185 - Positive data from early clinical studies are not necessarily predictive of later trial results, and the company may not be able to replicate positive data198 - Developing product candidates in combination with other therapies, such as RLY-2608 with fulvestrant and CDK4/6 inhibitors, exposes the company to additional risks, including potential for exacerbated adverse events and dependency on the approval and availability of the other therapies202207 Risks Related to Our Reliance on Third Parties - The company relies on third parties like CROs to conduct clinical trials, and their failure to perform successfully or comply with regulations could harm the company's ability to obtain regulatory approval231235 - Reliance on third-party manufacturers (CMOs) for product candidates creates risks related to supply sufficiency, cost, quality, and regulatory compliance, as the company does not own manufacturing facilities242243 - Sourcing active pharmaceutical ingredients (API) and starting materials from single-source suppliers poses a significant risk to development and commercialization if these suppliers fail to deliver250 Risks Related to Our Financial Position and Ability to Raise Additional Capital - The company has a limited operating history, has incurred significant operating losses since inception (an accumulated deficit of $1.9 billion as of June 30, 2025), and anticipates continued losses for the foreseeable future270271 - The company will need to raise substantial additional funding to support its development programs and commercialization efforts, with failure to do so potentially forcing delays, reductions, or elimination of programs278 Risks Related to Our Intellectual Property - The company's success depends on its ability to obtain and maintain patent protection for its technology and products, recognizing that the patent position of biotech companies is highly uncertain and involves complex legal questions293297 - Much of the company's R&D has been performed under the DESRES Agreement, leading to joint ownership of some work product, and disputes over this intellectual property could impair the company's ability to protect its product candidates294296 - The company relies on trade secrets and know-how, and an inability to protect the confidentiality of this information could harm its business and competitive position310 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None435 Other Information Brian Adams resigned as Chief Legal Officer and Secretary, effective August 8, 2025, with his departure not resulting from any disagreement with the company - Brian Adams, Chief Legal Officer and Secretary, resigned effective August 8, 2025, with his departure not the result of any dispute or disagreement with the company438 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, a lease amendment, and officer certifications - Key exhibits filed include an Amended and Restated Non-Employee Director Compensation Policy, a Third Amendment to a lease, and CEO/CFO certifications pursuant to the Sarbanes-Oxley Act440