Stifel, a financial services firm, maintained its Buy rating on Relay Therapeutics (NASDAQ: RLAY) with a steady price target of $28.00.
Following the recent European Society for Medical Oncology 2024 (ESMO24) meeting, the firm expressed a positive outlook on Relay Therapeutics' prospects, particularly concerning its RLY-2608 product, a mutant-selective PI3Kα inhibitor.
Stifel's commentary highlighted Relay Therapeutics' strong position to create significant value with RLY-2608. The company is fully funded to conduct a pivotal trial in second-line hormone receptor-positive PIK3CA mutant metastatic breast cancer (2L HR+ PIK3CAm mBC), which is considered a blockbuster opportunity. The firm's confidence is bolstered by supportive phase 1b data for RLY-2608.
Despite a recent downturn in Relay Therapeutics' shares last week, attributed to financing issues and competitive concerns, Stifel anticipates a recovery.
The firm addressed the competitive landscape, noting that while data from competitors such as Scorpion and STX-478 were solid, they may not be immediately game-changing.
This assessment is based on the historical monotherapy objective response rate (ORR) in breast cancer treatments, which has been around 20-25% with Roche (LON:0QQ6)'s inavolisib, a wild-type pathway inhibitor.
Stifel also countered the bearish view that Relay Therapeutics could be rapidly outpaced in innovation following an expensive pivotal development phase.
The firm suggests that the market will start to appreciate Relay Therapeutics' approximately 18-month competitive lead in the second-line breast cancer treatment space, its robust financial position, and the potential for RLY-2608's development and expansion into vascular malformations after 2026.
In other recent news, Relay Therapeutics has reported positive interim data for its drug candidate RLY-2608, showing a median progression-free survival (mPFS) of 9.2 months, outperforming the 5-7 months observed with other therapies.
Jefferies upgraded Relay Therapeutics stock from Hold to Buy following these results. However, Oppenheimer has downgraded their rating from Outperform to Perform, expressing concerns about the selectivity profile of RLY-2608.
Goldman Sachs (NYSE:GS) reinstated coverage on Relay Therapeutics with a Buy rating and a price target of $20.00, following the positive Phase 2 data for RLY-2608. On the other hand, H.C. Wainwright reduced its price target to $18.00 but maintained a Buy rating.
Relay Therapeutics also initiated a $200 million underwritten public offering of its common stock, with Goldman Sachs & Co. LLC, TD Cowen, Stifel, and BofA Securities serving as joint book-running managers. The company reported a cash position of approximately $688 million as of the second quarter of 2024, expected to fund operations into 2026.
InvestingPro Insights
In light of Stifel's positive outlook on Relay Therapeutics, it's worth considering some real-time data and InvestingPro Tips to gain a comprehensive understanding of the company's financial health and market position. According to InvestingPro, Relay Therapeutics holds a market capitalization of approximately $1.23 billion, which is a testament to its significant presence in the biotech industry. Despite a substantial revenue growth of roughly 3637.58% in the last twelve months as of Q2 2024, the company is quickly burning through cash, as noted by one of the InvestingPro Tips. This could be a point of concern for investors considering the company's long-term sustainability.
Another InvestingPro Tip that stands out is the fact that Relay Therapeutics has more cash than debt on its balance sheet. This is a positive sign that may provide the company with the flexibility to manage its operations and invest in its pipeline without the immediate pressure of debt repayment. Additionally, the company's stock price has been quite volatile, with a notable 17.83% return over the last month, yet a 20.08% drop in the past week alone. Investors might find this level of volatility to be a risk factor when considering their investment decisions.
For those interested in a deeper dive into Relay Therapeutics' performance and potential, there are additional InvestingPro Tips available that could shed light on the company's future profitability, analyst expectations, and stock price movements. It's worth noting that while analysts do not anticipate the company will be profitable this year, they have revised their earnings upwards for the upcoming period, indicating a belief in the company's potential to improve its financial standing.
The insights provided by InvestingPro, including the fair value estimates and next earnings date, can be particularly valuable for investors looking to make informed decisions. With a fair value estimate from analysts at $21 and the InvestingPro fair value at $8.06, there appears to be a range of expectations regarding the stock's potential value. As the company approaches its next earnings date on October 31, 2024, investors will be keenly awaiting updates on its financial performance and progress with RLY-2608.
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