IPO Preview: Relay Therapeutics Seeks $200 Million U.S. IPO


Relay Therapeutics (RLAY) intends to raise $200 million in an IPO of its common stock, according to an S-1 registration statement, although the final figure may differ.

The company is advancing a pipeline of small molecule medicines that promise to treat solid tumors in a highly targeted fashion.

RLAY is just entering Phase 1 trials for its lead candidate, so is still a very early stage firm.

I’ll provide an update when we learn more IPO details from management.

Cambridge, Massachusetts-based Relay was founded to focus its drug efforts on precision oncology treatments for solid tumors, however its Dynamo platform may have applications in other areas of precision medicine, including genetic disease.

Management is led by president and Chief Executive Officer Sanjiv Patel, M.D., who has been with the firm since March 2017 and was previously Executive Vice President, Chief Strategy Officer at Allergan, where he held other senior roles.

Below is a brief overview video of precision oncology:

Source: Saint Luke's Health System

The firm's lead candidate is RLY-1971 and it promises to inhibit Src homology region 2 domain-containing phosphatase-2 in patients with advanced solid tumors. RLAY initiated Phase 1 safety trials in Q1 2020.

Below is the current status of the company’s drug development pipeline:


Source: Company S-1 Filing

Investors in the firm have invested at least $548 million and include Third Rock Ventures, SoftBank, and Picularium.

According to a 2019 market research report by ResearchAndMarkets, the global market for solid tumor treatment was an estimated $121 billion in 2018 and is expected to reach $424 billion by 2027.

This represents a forecast CAGR (Compound Annual Growth Rate) of 15.0% from 2019 to 2027.

Key elements driving this expected growth are the growing incidence of breast cancer and other types of solid tumors as well as increasing awareness and treatment options being developed worldwide.

Also, North America currently accounts for 33.6% of market share, the highest by any region, while Europe trails at 30.2% and the Asia Pacific region represents 19.5% of demand.

The Asia Pacific region is expected to grow at a high rate in the coming years due to increased income, developing healthcare infrastructure and increasing government programs for awareness.

Virtually all major pharmaceuticals firms and many smaller ones have solid tumor treatment programs under development.

Relay’s recent financial results are typical of a clinical stage biopharma firm in that they feature no revenue and significant R&D and G&A expenses associated with advancing its pipeline through development processes.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):


Source: Company registration statement

As of March 31, 2020, the company had $70.3 million in cash and $34.8 million in total liabilities. (Unaudited, interim)

Relay intends to raise $200 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although I would expect to see this form of investor ‘support’ in a future filing.

Management says it will use the net proceeds from the IPO as follows:

to fund the remainder of our Phase 1 and Phase 1b exploratory trials for RLY-1971 and a portion of our confirmatory Phase 2/3 trials;

to fund our Phase 1 exploratory trial for RLY-4008 and a portion of our confirmatory Phase 2/3 trials;

to identify a lead development candidate and conduct IND-enabling studies for RLY-PI3K1047 and a portion of our Phase 1 and Phase 1b exploratory trials;

for the continued development of our discovery programs; and

the remaining proceeds for general corporate purposes, which may include the hiring of additional personnel, capital expenditures and the costs of operating as a public company.

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are J.P. Morgan, Goldman Sachs, Cowen and Guggenheim Securities.


Relay is seeking an above average IPO transaction size to advance its pipeline of solid tumor through and into Phase 1 trials.

The firm’s lead candidate is currently in Phase 1 safety trials and is still enrolling patients, so is quite early in the process.

The market opportunity for solid tumor treatment is enormous, probably the largest single market in the oncology arena and is expected to grow markedly in the coming years.

The company has no disclosed research collaborations with pharma firms, although it has a research collaboration for information technology with D.E. Shaw Research to discover potential new biological targets and drug compounds.

J.P. Morgan is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 78.8% since their IPO. This is a top-tier performance for all major underwriters during the period.

RLAY is still at a very early stage of development, so I consider the IPO to be ultra high risk and possibly most suited to institutional investors.

I’ll provide a final opinion when we learn more details from management.

Expected IPO Pricing Date: To be announced.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)


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