SEC Filing | Relay Therapeutics

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39385

RELAY THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		47-3923475
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

399 Binney Street, 2nd Floor
Cambridge, MA

02139

(Address of principal executive offices)

(Zip Code)

(617) 370-8837

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.001 per share

RLAY

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2023, the registrant had 122,133,716 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION		1
Item 1.	Financial Statements (Unaudited)		1
	Condensed Consolidated Balance Sheets		1
	Condensed Consolidated Statements of Operations and Comprehensive Loss		2
	Condensed Consolidated Statements of Stockholders’ Equity		3
	Condensed Consolidated Statements of Cash Flows		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23
Item 4.	Controls and Procedures		23
PART II.	OTHER INFORMATION		24
Item 1.	Legal Proceedings		24
Item 1A.	Risk Factors		24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65
Item 5.	Other Information		65
Item 6.	Exhibits		67
Signatures			68

Summary of the Material Risks Associated with Our Business

•

We have never successfully completed any clinical trials, and we may be unable to do so for any product candidates we develop. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

•

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

•

Positive data from preclinical or early clinical studies of our product candidates are not necessarily predictive of the results of later clinical studies and any future clinical trials of our product candidates. If we cannot replicate the positive data from our preclinical or early clinical studies of our product candidates in our future clinical trials, we will be unable to successfully develop, obtain regulatory approval for and commercialize our product candidates.

•

Our current or future clinical trials may reveal significant adverse events not seen in our preclinical or nonclinical studies or early clinical data and may result in a safety profile that would inhibit regulatory approval or market acceptance of any of our product candidates.

•

Although we intend to explore other therapeutic opportunities, in addition to the product candidates that we are currently developing, we may fail to identify viable new product candidates for clinical development for a number of reasons. If we fail to identify additional potential product candidates, our business could be materially harmed.

•

The incidence and prevalence for target patient populations of our product candidates have not been established with precision. If the market opportunities for our product candidates are smaller than we estimate or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.

•

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•

If we are not able to obtain, or if delays occur in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.

•

Under our Amended and Restated Collaboration and License Agreement, or the DESRES Agreement, with D. E. Shaw Research, LLC, or D. E. Shaw Research, we collaborate with D. E. Shaw Research to rapidly develop various protein models, a process that depends on D. E. Shaw Research’s use of their proprietary supercomputer, Anton 2. A termination of the DESRES Agreement could have a material adverse effect on our business, financial condition, results of operations, and prospects.

•

We rely on third parties to conduct our ongoing clinical trials of RLY-4008, RLY-2608, and RLY-5836 and expect to rely on third parties to conduct future clinical trials, as well as investigator-sponsored clinical trials of our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

•

We have and may enter into other collaborations with third parties for the research, development, manufacture and commercialization of one or more of our programs or product candidates. If these collaborations are not successful, our business could be adversely affected.

•

We are a biopharmaceutical company with a limited operating history. We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future. We have no products approved for commercial sale and have not generated any revenue from product sales.

•

We will need to raise substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.

•

Any future pandemic, epidemic, or outbreak of an infectious disease, similar to the COVID-19 pandemic, could affect our business and our financial results and could cause further disruption to the development of our product candidates.

•

Global economic and political conditions, including the economic uncertainty tied to interest rates, credit, and financial market instability, as well as political uncertainty relating to Russia and Ukraine, are difficult to mitigate and could pose challenges to our growth and profitability and could adversely affect our business, financial condition or results of operations.

•

If we are unable to adequately protect our proprietary technology or obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products will be impaired.

•

Even if we receive regulatory approval for any of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, and our product candidates, if approved, could be subject to post-market study requirements, marketing and labeling restrictions, and even recall or market withdrawal if unanticipated safety issues are discovered following approval, which may result in significant additional expense.

iii

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, implied or express statements about:

•

the initiation, timing, progress, results, and cost of our product candidates and research and development programs and our current and future preclinical and clinical studies, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

•

the identification of research priorities and application of a risk-mitigated strategy to efficiently discover and develop product candidates, including by applying learnings from one program to other programs and from one modality to our other modalities;

•

the potential safety and efficacy of our product candidates and the therapeutic implications of clinical and preclinical data;

•

the manufacture of our drug substances, delivery vehicles, and product candidates for preclinical use, for clinical trials and on a larger scale for commercial use, if approved;

•

our relationships with our third-party strategic collaborators and their ability to continue research and development activities relating to our development candidates and product candidates;

•

the funding for our operations necessary to complete further development and commercialization of our product candidates;

•

our plans to seek regulatory approval of our product candidates;

•

the pricing and reimbursement of our product candidates, if approved;

•

the implementation of our business model, and strategic plans for our business, product candidates, and technology;

•

the scope of protection for intellectual property rights covering our product candidates and technology;

•

estimates of our future expenses, revenues, capital requirements, and our needs for additional financing;

•

the potential benefits of strategic collaboration agreements with collaborators with development, regulatory and commercialization expertise;

•

future agreements with third parties in connection with the commercialization of product candidates and any other approved product;

•

the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

•

our financial performance;

•

the rate and degree of market acceptance of our product candidates;

•

regulatory developments in the United States and foreign countries;

•

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•

our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;

•

the success of competing therapies that are or may become available;

•

our ability to attract and retain key scientific or management personnel;

•

the impact of laws and regulations on our business and programs;

•

developments relating to our competitors and our industry;

•

the effect of public health epidemics or outbreaks of an infectious disease, such as COVID-19, and the ongoing conflict between Russia and Ukraine, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and current and future clinical trials;

•

general economic and market conditions, including, among others, inflation, interest rates, tax rates economic uncertainty, the actual or perceived failure or financial difficulties of additional financial institutions and economic and trade sanctions, including their effect on our results of operations; and

•

other risks and uncertainties, including those listed under the caption “Risk Factors.”

In some cases, you can identify forward-looking statements by terminology such as “may,” “can,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “forecasts,” “goal,” “likely,” “predicts,” “potential,” “projects,” “will,” “might,” “could,” “continue,” or the negative of these terms or other comparable terminology. These statements are only predictions. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed above under “Summary of the Material Risks Associated with Our Business,” those listed below under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission, or the SEC, as exhibits hereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our own internal estimates and research as well as from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Relay Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	June 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	145,902		$	151,794
Investments		725,671			847,123
Accounts receivable		78			306
Contract asset		—			4,913
Prepaid expenses		9,306			12,110
Other current assets		3,392			3,259
Total current assets		884,349			1,019,505
Property and equipment, net		11,749			11,634
Operating lease assets		60,911			63,754
Restricted cash		2,707			2,578
Intangible asset		2,300			2,300
Total assets	$	962,016		$	1,099,771
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,778		$	10,578
Accrued expenses		26,910			22,703
Operating lease liabilities		4,610			4,276
Deferred revenue		15			—
Other current liabilities		25,263			26,152
Total current liabilities		71,576			63,709
Operating lease liabilities, net of current portion		51,098			53,466
Contingent consideration liability		29,223			32,378
Total liabilities		151,897			149,553
Commitments and contingencies (Note 9)
Stockholders’ equity:
Undesignated preferred stock, $0.001 par value, 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; no shares issued and outstanding as of June 30, 2023 and December 31, 2022		—			—
Common stock, $0.001 par value; 300,000,000 shares authorized as of June 30, 2023, and December 31, 2022; 121,944,876 and 121,112,234 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		122			121
Additional paid-in capital		2,067,431			2,019,126
Accumulated other comprehensive loss		(6,081	)		(10,420	)
Accumulated deficit		(1,251,353	)		(1,058,609	)
Total stockholders’ equity		810,119			950,218
Total liabilities and stockholders’ equity	$	962,016		$	1,099,771

See accompanying notes.

Relay Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue:
License and other revenue	$	119		$	365		$	345		$	784
Total revenue		119			365			345			784
Operating expenses:
Research and development expenses	$	88,201		$	60,511		$	171,028		$	112,178
Change in fair value of contingent consideration liability		(2,152	)		200			(3,155	)		(4,395	)
General and administrative expenses		20,120			17,465			39,699			33,533
Total operating expenses		106,169			78,176			207,572			141,316
Loss from operations		(106,050	)		(77,811	)		(207,227	)		(140,532	)
Other income:
Interest income		7,559			1,005			14,500			1,701
Other (expense) income		(14	)		18			(17	)		(3	)
Total other income, net		7,545			1,023			14,483			1,698
Net loss	$	(98,505	)	$	(76,788	)	$	(192,744	)	$	(138,834	)
Net loss per share, basic and diluted	$	(0.81	)	$	(0.71	)	$	(1.59	)	$	(1.28	)
Weighted average shares of common stock, basic and diluted		121,680,844			108,644,329			121,501,849			108,469,760
Other comprehensive loss:
Unrealized holding (loss) gain		(279	)		(2,688	)		4,339			(10,818	)
Total other comprehensive (loss) gain		(279	)		(2,688	)		4,339			(10,818	)
Total comprehensive loss	$	(98,784	)	$	(79,476	)	$	(188,405	)	$	(149,652	)

See accompanying notes.

Relay Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

(Unaudited)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Par Value		Capital		Income/(Loss)			Deficit			Equity
Balances at December 31, 2022		121,112,234	$	121	$	2,019,126	$	(10,420	)	$	(1,058,609	)	$	950,218
Issuance of common stock upon exercise of stock options		255,918		—		1,297		—			—			1,297
Vesting of restricted stock units		108,506		—		—		—			—			—
Stock compensation expense		—		—		21,518		—			—			21,518
Unrealized gain on investments		—		—		—		4,618			—			4,618
Net loss		—		—		—		—			(94,239	)		(94,239	)
Balances at March 31, 2023		121,476,658	$	121	$	2,041,941	$	(5,802	)	$	(1,152,848	)	$	883,412
Issuance of common stock upon exercise of stock options		96,605		1		452		—			—			453
Issuance of common stock under ESPP		152,369		—		1,627		—			—			1,627
Vesting of restricted stock units		219,244		—		—		—			—			—
Stock compensation expense		—		—		23,411		—			—			23,411
Unrealized loss on investments		—		—		—		(279	)		—			(279	)
Net loss		—		—		—		—			(98,505	)		(98,505	)
Balances at June 30, 2023		121,944,876	$	122	$	2,067,431	$	(6,081	)	$	(1,251,353	)	$	810,119


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Par Value		Capital		Income/(Loss)			Deficit			Equity
Balances at December 31, 2021		108,210,318	$	109	$	1,666,887	$	(1,088	)	$	(768,100	)	$	897,808
Issuance of common stock upon exercise of stock options		195,799		—		883		—			—			883
Vesting of restricted stock units		27,233		—		—		—			—			—
Stock compensation expense		—		—		13,455		—			—			13,455
Unrealized loss on investments		—		—		—		(8,130	)		—			(8,130	)
Net loss		—		—		—		—			(62,046	)		(62,046	)
Balances at March 31, 2022		108,433,350	$	109	$	1,681,225	$	(9,218	)	$	(830,146	)	$	841,970
Issuance of common stock upon exercise of stock options		182,113		—		859		—			—			859
Issuance of common stock under ESPP		79,859		—		1,137		—			—			1,137
Vesting of restricted stock units		115,156		—		—		—			—			—
Stock compensation expense		—		—		15,147		—			—			15,147
Unrealized loss on investments		—		—		—		(2,688	)		—			(2,688	)
Net loss		—		—		—		—			(76,788	)		(76,788	)
Balances at June 30, 2022		108,810,478	$	109	$	1,698,368	$	(11,906	)	$	(906,934	)	$	779,637

See accompanying notes.

Relay Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(192,744	)	$	(138,834	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation expense		44,929			28,602
Depreciation expense		2,531			1,931
Net amortization of premiums and discounts on investments		(4,218	)		1,227
Change in fair value of contingent consideration liability		(3,155	)		(4,395	)
Changes in assets and liabilities:
Accounts receivable		228			115
Contract asset		4,913			(227	)
Prepaid expenses and other current assets		2,671			478
Operating lease assets and liabilities, net		809			73
Accounts payable		4,202			(4,611	)
Accrued expenses and other liabilities		4,088			9,540
Deferred revenue		15			(165	)
Net cash used in operating activities		(135,731	)		(106,266	)
Cash flows from investing activities:
Purchases of property and equipment		(3,418	)		(4,651	)
Purchases of investments