Relay Therapeutics, Inc. (NASDAQ:RLAY), a biotech company, has announced the termination of its collaboration and license agreement with Genentech, a member of the Roche (LON:0QQ6) Group. The notice of termination was received by the company on Monday, July 11, 2024, and will take effect 180 days from that date.
The terminated agreement, initially signed on December 11, 2020, was focused on the development and commercialization of an oral, small molecule inhibitor known as RLY-1971, which has since been referred to as migoprotafib or GDC-1971. This compound is designed to inhibit Src homology region 2 domain-containing phosphatase-2.
Throughout the course of the partnership, Relay Therapeutics received a total of $121.8 million from Genentech. This included a $75 million upfront payment and $45 million in milestone payments, alongside reimbursements for certain research and development costs.
With the agreement's termination, Relay Therapeutics will not receive any further milestone payments or other financial benefits post the termination date. Additionally, both parties will be released from any ongoing development or commercialization obligations, and all licenses granted to Genentech under the agreement will expire on the termination date.
Details regarding the termination are summarized from the agreement, which is referenced in full in the company's Annual Report on Form 10-K for the year ended December 31, 2023. The termination is significant for Relay Therapeutics as it impacts the company's potential revenue and development plans for migoprotafib.
In other recent news, Relay Therapeutics has been the focus of several analyst updates. Barclays (LON:BARC) has upgraded the biotechnology company's stock to Overweight from Equalweight, due to an improved outlook for the second half of 2024. The firm's decision was influenced by the potential impact of upcoming data updates in breast cancer research, which they believe present a favorable risk/reward scenario. Barclays also noted that Relay Therapeutics' enterprise value, trading at 1.1 times its cash position, is considered attractive compared to the 2.8 times cash valuation average for the firm's coverage universe.
On the other hand, Oppenheimer has reduced its price target for Relay Therapeutics to $25 from $33, while maintaining an Outperform rating on the stock. This follows the company's first-quarter 2024 results, which were in line with expectations and did not present any significant surprises. Despite a delay in significant data availability until the end of 2024, Oppenheimer remains positive about Relay Therapeutics, particularly its lead drug candidate, RLY-2608. The drug's improved selectivity could lead to better tolerability and longer periods of patient usage. These are the most recent developments for Relay Therapeutics.
InvestingPro Insights
In light of the recent termination of the collaboration between Relay Therapeutics and Genentech, investors may be seeking additional insights into the company's financial health and future prospects. According to InvestingPro, Relay Therapeutics holds more cash than debt on its balance sheet, which could provide some financial stability in the absence of future milestone payments from Genentech. Additionally, the company has experienced a significant return over the last week, with a 19.16% price total return, which may indicate investor confidence despite the recent news.
InvestingPro Data reveals a market capitalization of approximately $1.19 billion for Relay Therapeutics, and while the company has shown a remarkable revenue growth of 2873.65% over the last twelve months as of Q1 2024, it also suffers from weak gross profit margins, with a gross profit margin of -822.7%. These metrics suggest a company with a strong capacity for revenue generation but with challenges in translating that revenue into profit.
For those considering an investment in Relay Therapeutics, it is worth noting that analysts do not anticipate the company will be profitable this year, and the stock price movements have been quite volatile. However, the company's liquid assets exceed its short-term obligations, which may provide some reassurance regarding its ability to meet immediate financial needs. For a deeper analysis and additional InvestingPro Tips, including the company's cash burn rate and sales decline expectations, visit InvestingPro. There are 11 more tips available, offering a comprehensive understanding of Relay Therapeutics' financial position. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription for further insights.
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