On Tuesday, Relay Therapeutics (NASDAQ:RLAY) stock received an upgrade from a Jefferies analyst, who changed the stock's rating from Hold to Buy and increased the price target to $16.00, up from the previous target of $10.60.
The upgrade follows the release of interim data for the company's drug candidate RLY-2608, used in combination with fulvestrant in treating PIK3CA-mutated hormone receptor-positive, HER2-negative metastatic breast cancer.
The analyst noted that the positive interim results have shifted perceptions, especially after initial skepticism due to earlier data that showed no response and a discontinued similar inhibitor from another company. The management's focus on selectivity for better safety and tolerability is believed to be validated by the new data.
According to the firm, Relay's RLY-2608 has shown competitive efficacy when compared with other PI3K and AKT inhibitor combinations. The confirmed objective response rate stands at 30%, which is higher than the 19-23% reported for other similar treatments.
Furthermore, the median progression-free survival (mPFS) is approximately 9.2 months, outperforming the 5-7 months observed with other therapies.
However, the analyst also mentioned that while Relay's data is promising, it does not necessarily outpace next-generation SERD combinations. For instance, a combination of vepdeg with CDK4/6 inhibitors indicated an 11-month mPFS, with 13.7 months in patients with ESR1 mutations in later-line settings. Additional data from competitors, including Pfizer (NYSE:PFE)'s CDK4 inhibitor, is anticipated in the first quarter of 2025.
The full data for RLY-2608 is expected to be presented at the San Antonio Breast Cancer Symposium in 2024, providing a more comprehensive view of the drug's efficacy and safety profile.
In other recent news, Relay Therapeutics has seen a flurry of activity centered around its drug development efforts and financial forecasts. The company's breast cancer treatment, RLY-2608, demonstrated promising results in a recent trial, showing a median progression-free survival of 9.2 months. This performance led Goldman Sachs (NYSE:GS) to reinstate coverage on Relay Therapeutics with a Buy rating and a price target of $20.
However, the company's trial results also prompted Oppenheimer to adjust its stance on Relay Therapeutics, downgrading the rating from Outperform to Perform. The analyst firm expressed concerns about the selectivity profile of RLY-2608, suggesting that it might not be as robust as competitors' drugs.
Relay Therapeutics also initiated a $200 million underwritten public offering of its common stock. Goldman Sachs & Co. LLC, TD Cowen, Stifel, and BofA Securities are serving as joint book-running managers for the offering.
In the wake of these developments, several firms adjusted their price targets for Relay Therapeutics. Barclays (LON:BARC) maintained an Overweight rating and raised the stock's price target to $17.00, BofA Securities revised its price target to $20.00 and maintained a Buy rating, while H.C. Wainwright reduced its price target to $18.00 but also maintained a Buy rating.
As of the second quarter of 2024, Relay Therapeutics reported a cash position of approximately $688 million, expected to fund operations into 2026. The company plans to initiate a monotherapy solid tumor dose expansion cohort by the end of 2024, and a vascular malformations study in 2025. These are the recent developments in the company.
InvestingPro Insights
As Relay Therapeutics (NASDAQ:RLAY) captures attention with its recent upgrade by a Jefferies analyst, real-time data from InvestingPro provides further context for investors considering the stock. The company's market capitalization stands at a robust $1.27 billion, indicating significant investor confidence despite the company's challenges. Notably, Relay Therapeutics holds more cash than debt on its balance sheet, a sign of financial stability that could support its ongoing research and development efforts.
Investors should be aware of the company's significant cash burn, as highlighted by InvestingPro Tips, which could impact the long-term sustainability of its operations. However, the company's stock has seen a strong return over the last week, reflecting positive market reactions to recent developments. Relay's liquid assets also exceed its short-term obligations, providing some cushion for its cash-intensive activities.
While the company's financial metrics such as a negative P/E ratio of -3.8 and a negative gross profit margin suggest challenges in profitability, these figures are not uncommon for biotech firms in the development stage. Relay's revenue growth over the last twelve months has been impressive at 3637.58%, a testament to the potential of its drug pipeline. For investors seeking to delve deeper into Relay Therapeutics' financial health and future prospects, there are additional InvestingPro Tips available at Investing.com/pro/RLAY.
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