IPO Launch: Relay Therapeutics Seeks $250 Million IPO


Relay Therapeutics (RLAY) has filed to raise $250 million from the sale of its common stock, according to an amended registration statement.

The company is advancing a pipeline of precision oncology treatment candidates for various types of solid tumors.

RLAY is still enrolling patients in its lead program’s Phase 1 safety trial, so the firm is extremely early stage and the IPO may be more suited to institutional investors with long-term hold time horizons.


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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 headed 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 collaboration or related 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)

RLAY intends to sell 14.7 million shares of common stock at a midpoint price of $16.00 per share for gross proceeds of approximately $250 million, not including the sale of customary underwriter options.

No existing shareholders have indicated an interest to purchase shares at the IPO price.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $1.1 billion.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 18.02%.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds ‘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 underwriters of the IPO are J.P. Morgan, Goldman Sachs, Cowen and Guggenheim Securities.


RLAY is seeking a larger than typical biopharma IPO transaction size to fund development for its pipeline.

For its lead candidate, the firm has recently entered Phase 1 safety trials but is still enrolling patients in that trial.

The market opportunity for the firm’s candidates is extremely large. Solid tumor treatment opportunities are expected to explode in the coming years as the population ages and the rate of incidence increases sharply.

The company has disclosed no research or commercial collaborations with major pharma firms, so is pursuing a ‘go it alone’ approach at this time.

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 78.0% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, management is asking investors at IPO to pay an enterprise value of $1.1 billion, far above the typical range for biopharmas at IPO of $250 million to $500 million.

Given the firm’s extremely early stage of development and pricey IPO, my opinion on the IPO is NEUTRAL.

Expected IPO Pricing Date: July 15, 2020.

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 in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)


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