Relay Therapeutics, Inc. [RLAY] Filings

10-Q 1 rlay-20240630.htm 10-Q 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, 2024


☐	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 2, 2024, the registrant had 133,889,966 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		21
Item 4.	Controls and Procedures		22
PART II.	OTHER INFORMATION		23
Item 1.	Legal Proceedings		23
Item 1A.	Risk Factors		23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		63
Item 5.	Other Information		64
Item 6.	Exhibits		65
Signatures			66

Summary of the Material Risks Associated with Our Business

•

We have never successfully completed any large-scale, pivotal clinical trials, and we may be unable to do so for any product candidates we develop. Clinical product development involves a lengthy and expensive process, with an uncertain outcome. 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.

•

We rely on third parties to conduct our ongoing clinical trials of our product candidates 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 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.

•

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.

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, enrollment, 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, as well as the period during which the results of the trials will become available;

•

the identification of research priorities, reallocation of resources among programs, 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, as well as the potential expected benefits therefrom;

•

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;

iii

•

developments relating to our competitors and our industry;

•

the effect of public health epidemics or outbreaks of an infectious disease and ongoing geopolitical conflicts, 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, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	134,125		$	143,736
Investments		554,290			606,350
Prepaid expenses		10,123			16,702
Other current assets		5,732			3,315
Total current assets		704,270			770,103
Property and equipment, net		8,350			10,901
Operating lease assets		54,923			57,969
Restricted cash		2,707			2,707
Intangible asset		2,300			2,300
Total assets	$	772,550		$	843,980
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	11,167		$	9,211
Accrued expenses		27,773			14,890
Operating lease liabilities		5,335			4,964
Other current liabilities		768			1,204
Total current liabilities		45,043			30,269
Operating lease liabilities, net of current portion		45,763			48,502
Contingent consideration liability		—			13,206
Total liabilities		90,806			91,977
Commitments and contingencies (Note 9)
Stockholders’ equity:
Undesignated preferred stock, $0.001 par value, 10,000,000 shares authorized as of June 30, 2024 and December 31, 2023; no shares issued and outstanding as of June 30, 2024 and December 31, 2023		—			—
Common stock, $0.001 par value; 300,000,000 shares authorized as of June 30, 2024, and December 31, 2023; 133,324,954 and 127,462,409 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		133			127
Additional paid-in capital		2,257,132			2,152,654
Accumulated other comprehensive loss		(1,340	)		(196	)
Accumulated deficit		(1,574,181	)		(1,400,582	)
Total stockholders’ equity		681,744			752,003
Total liabilities and stockholders’ equity	$	772,550		$	843,980

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,
	2024			2023			2024			2023
Revenue:
License and other revenue	$	—		$	119		$	10,007		$	345
Total revenue		—			119			10,007			345
Operating expenses:
Research and development expenses	$	91,992		$	88,201		$	174,395		$	171,028
Change in fair value of contingent consideration liability		(11,374	)		(2,152	)		(13,206	)		(3,155	)
General and administrative expenses		20,139			20,120			39,938			39,699
Total operating expenses		100,757			106,169			201,127			207,572
Loss from operations		(100,757	)		(106,050	)		(191,120	)		(207,227	)
Other income:
Interest income		8,547			7,559			17,498			14,500
Other (expense) income		(2	)		(14	)		23			(17	)
Total other income, net		8,545			7,545			17,521			14,483
Net loss	$	(92,212	)	$	(98,505	)	$	(173,599	)	$	(192,744	)
Net loss per share, basic and diluted	$	(0.69	)	$	(0.81	)	$	(1.32	)	$	(1.59	)
Weighted average shares of common stock, basic and diluted		132,821,826			121,680,844			131,832,420			121,501,849
Other comprehensive (loss) income:
Unrealized holding (loss) gain		(182	)		(279	)		(1,144	)		4,339
Total other comprehensive (loss) income		(182	)		(279	)		(1,144	)		4,339
Total comprehensive loss	$	(92,394	)	$	(98,784	)	$	(174,743	)	$	(188,405	)

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, 2023		127,462,409	$	127	$	2,152,654	$	(196	)	$	(1,400,582	)	$	752,003
Issuance of common stock through Private Placement, net		2,500,000		3		29,800		—			—			29,803
Issuance of common stock via At-the-Market Offerings, net		1,889,597		2		17,930		—			—			17,932
Issuance of common stock through exercise of stock options		236,367		—		1,187		—			—			1,187
Vesting of restricted stock units		212,478		—		—		—			—			—
Stock compensation expense		—		—		27,188		—			—			27,188
Unrealized loss on investments		—		—		—		(962	)		—			(962	)
Net loss		—		—		—		—			(81,387	)		(81,387	)
Balances at March 31, 2024		132,300,851	$	132	$	2,228,759	$	(1,158	)	$	(1,481,969	)	$	745,764
Issuance of common stock through exercise of stock options		106,173		1		412		—			—			413
Issuance of common stock via employee stock purchase plan		203,818		—		1,129		—			—			1,129
Vesting of restricted stock units		714,112		—		—		—			—			—
Stock compensation expense		—		—		26,832		—			—			26,832
Unrealized loss on investments		—		—		—		(182	)		—			(182	)
Net loss		—		—		—		—			(92,212	)		(92,212	)
Balances at June 30, 2024		133,324,954	$	133	$	2,257,132	$	(1,340	)	$	(1,574,181	)	$	681,744


	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 through 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 via employee stock purchase plan		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

See accompanying notes.

Relay Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(173,599	)	$	(192,744	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation expense		54,020			44,929
Depreciation expense		2,763			2,531
Net amortization of premiums and discounts on investments		(6,956	)		(4,218	)
Change in fair value of contingent consideration liability		(13,206	)		(3,155	)
Changes in assets and liabilities:
Accounts receivable		—			228
Contract asset		—			4,913
Prepaid expenses and other current assets		4,162			2,671
Operating lease assets and liabilities, net		678			809
Accounts payable		3,307			4,202
Accrued expenses and other liabilities		12,675			4,088
Deferred revenue		—			15
Net cash used in operating activities		(116,156	)		(135,731	)
Cash flows from investing activities:
Purchases of property and equipment		(1,791	)		(3,418	)
Purchases of investments		(310,418	)		(163,975	)
Proceeds from maturities of investments		368,290			293,984
Net cash provided by investing activities		56,081			126,591
Cash flows from financing activities:
Proceeds from issuance of common stock through Private Placement, net		29,803			—
Proceeds from issuance of common stock via At-the-Market Offerings, net		17,932			—
Proceeds from issuance of common stock through exercise of stock options		1,600			1,750
Proceeds from issuance of common stock via employee stock purchase plan		1,129			1,627
Net cash provided by financing activities		50,464			3,377
Net decrease in cash, cash equivalents, and restricted cash		(9,611	)		(5,763	)
Cash, cash equivalents, and restricted cash at beginning of period		146,443			154,372
Cash, cash equivalents, and restricted cash at end of period	$	136,832		$	148,609
Supplemental disclosure of non-cash activities:
Periodic change to additions of property and equipment in current liabilities	$	(1,579	)	$	(772	)

Reconciliation of Cash, Cash Equivalents, and Restricted Cash from Balance Sheets to Statement of Cash Flows


	Six Months Ended June 30,
	2024		2023
	(in thousands)
Cash and cash equivalents	$	134,125	$	145,902
Restricted cash		2,707		2,707
Cash, cash equivalents, and restricted cash per statements of cash flows	$	136,832	$	148,609

See accompanying notes.

Relay Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except share and per share data)

(Unaudited)

1. Nature of Business and Basis of Presentation

Relay Therapeutics, Inc. (the "Company") was incorporated in Delaware on May 4, 2015 and is headquartered in Cambridge, Massachusetts. The Company is a clinical-stage, precision medicine company transforming the drug discovery process by combining leading-edge computational and experimental technologies with the goal of bringing life-changing therapies to patients. As the Company believes it is among the first of a new breed of biotech created at the intersection of complementary techniques and technologies, the Company aims to push the boundaries of what’s possible in drug discovery. The Company’s Dynamo™ platform integrates an array of leading-edge computational and experimental approaches designed to drug protein targets that have previously been intractable or inadequately addressed. The Company’s initial focus is on enhancing small molecule therapeutic discovery in targeted oncology and genetic disease indications. The Company’s lead product candidates, RLY-2608 and RLY-4008 (lirafugratinib), are in clinical development. The Company announced three discovery stage programs in June 2024, including two novel programs from its genetic disease portfolio to address clinically and commercially validated targets in vascular malformations and Fabry disease, respectively, and an NRAS-selective inhibitor. The Company also has more than five active discovery stage programs across both precision oncology and genetic diseases.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations, and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance-reporting capabilities.

The Company’s product candidates are in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval, or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants.

The Company has devoted substantially all of its resources to developing its product candidates by integrating its computation and experimental approaches, building its intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations.

The Company has incurred net operating losses since inception and had an accumulated deficit of $1.6 billion as of June 30, 2024. The Company expects that its existing cash, cash equivalents, and investments as of June 30, 2024 will enable it to fund its planned operating expenses and capital expenditure requirements for at least one year from the date of the issuance of these condensed consolidated financial statements. The future viability of the Company is dependent on its ability to generate cash from operating activities or to raise additional capital to finance its operations. The Company’s failure to raise capital as and when needed could have a material adverse effect on its financial condition and ability to pursue its business strategies. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into license or collaboration arrangements or obtain government grants. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce, or eliminate its research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect its business prospects. In the event the Company requires additional funding, there can be no assurance that it will be successful in obtaining sufficient funding on terms acceptable to the Company to fund its continuing operations, if at all.

2. Significant Accounting Policies

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for reporting on Form 10-Q.

The Company’s condensed consolidated financial statements include the accounts of Relay Therapeutics, Inc. and its wholly-owned subsidiaries, Relay Therapeutics Securities Corporation and Relay ML Discovery, LLC.

All intercompany balances and transactions have been eliminated.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 are unaudited. The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s condensed consolidated financial position as of June 30, 2024, the condensed consolidated results of its operations for the three and six months ended June 30, 2024 and 2023, and condensed consolidated cash flows for the six months ended June 30, 2024 and 2023. The condensed consolidated financial data and other information disclosed in these notes related to the three and six months ended June 30, 2024 and 2023 are unaudited. The condensed consolidated results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the fair value of contingent milestone payments in connection with the acquisition of ZebiAI Therapeutics, Inc. ("ZebiAI"), the determination of the transaction price and standalone selling price of performance obligations under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"), the accrual of research and development and manufacturing expenses, the valuation of equity instruments, and the incremental borrowing rate for determining operating lease assets and liabilities. Estimates are periodically reviewed in light of changes in circumstances, facts, and experience.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to provide enhancements to segment disclosures, even for entities with only one reportable segment. In particular, the standard will require disclosures of significant segment expenses regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss. The standard will also require disclosure of all other segment items by reportable segment and a description of its composition. Finally, the standard will require disclosure of the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard is effective for annual periods beginning after December 15, 2023 and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the standard on the presentation of its condensed consolidated financial statements and footnotes.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to provide enhancements to annual income tax disclosures. In particular, the standard will require more detailed information in the income tax rate reconciliation, as well as the disclosure of income taxes paid disaggregated by jurisdiction, among other enhancements. The standard is effective for years beginning after December 15, 2024 and early adoption is permitted. The Company is currently evaluating the impact of the standard on the presentation of its condensed consolidated financial statements and footnotes.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:


	Fair Value Measurements as of June 30, 2024:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash equivalents:
Money market funds	$	114,454	$	—	$	—	$	114,454
U.S. treasury bills		—		7,995		—	$	7,995
Total cash equivalents		114,454		7,995		—		122,449
Investments:
U.S. treasury bills		—		477,868		—	$	477,868
U.S. agency securities		—		76,422		—	$	76,422
Total investments		—		554,290		—		554,290
Total assets	$	114,454	$	562,285	$	—	$	676,739
Liabilities
Contingent Milestone Payments	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—


	Fair Value Measurements as of December 31, 2023:
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash equivalents:
Money market funds	$	140,466	$	—	$	—	$	140,466
Total cash equivalents		140,466		—		—		140,466
Investments:
U.S. treasury bills		—		416,008		—		416,008
U.S. agency securities		—		190,342		—		190,342
Total investments		—		606,350		—		606,350
Total assets	$	140,466	$	606,350	$	—	$	746,816
Liabilities
Contingent Milestone Payments	$	—	$	—	$	8,206	$	8,206
Total liabilities	$	—	$	—	$	8,206	$	8,206

In determining the fair value of its investments at each date presented above, the Company relied on quoted prices for similar securities in active markets or using other inputs that are observable or can be corroborated by observable market data.

Fair Value of Contingent Consideration

In April 2021, the Company acquired ZebiAI.

Pursuant to the terms of the acquisition, the Company is liable for certain contingent consideration, including (a) up to $85.0 million in platform and program milestones ("Contingent Milestone Payments") and (b) up to $100.0 million in earnout payments ("Contingent Earnout Payments"), both payable to ZebiAI's former equity holders upon achievement.

The Company classified the Contingent Milestone Payments within Level 3 of the fair value hierarchy. Pursuant to FASB ASC Topic 480, Distinguishing Liabilities from Equity ("ASC 480"), the Company has accounted for the Contingent Milestone Payments as a liability and remeasured the fair value at each reporting period based on the probability of achieving the contingent milestones and timing. Significant judgment has been used in determining the underlying assumptions. In connection therewith, the liability was reduced to $0 on the condensed consolidated balance sheet as of June 30, 2024.

The Company has not accounted for the Contingent Earnout Payments as derivatives under FASB ASC Topic 815, Derivatives and Hedging ("ASC 815"). As such, they were only measured at fair value as of the acquisition date and have not been re-assessed at fair value as of each reporting period end. During the three months ended June 30, 2024, the contingency was resolved without the consideration becoming payable. Therefore, the liability was reduced to $0 on the condensed consolidated balance sheet as of June 30, 2024.

The following table reconciles the change in the contingent consideration liability:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(in thousands)
Balance at beginning of period	$	11,374		$	31,375		$	13,206		$	32,378
Change in fair value of Contingent Milestone Payments		(6,374	)		(2,152	)		(8,206	)		(3,155	)
Change in fair value of Contingent Earnout Payments		(5,000	)		—			(5,000	)		—
	$	—		$	29,223		$	—		$	29,223

4. Investments

The fair value of available-for-sale investments by type of security was as follows:


	June 30, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Investments:
U.S. treasury bills	$	285,934	$	1	$	(565	)	$	285,370
U.S. agency securities		53,748		—		(91	)		53,657
Total investments with a maturity of one year or less		339,682		1		(656	)		339,027

U.S. treasury bills		193,093		8		(603	)		192,498
U.S. agency securities		22,855		1		(91	)		22,765
Total investments with a maturity of one to two years		215,948		9		(694	)		215,263
Total investments	$	555,630	$	10	$	(1,350	)	$	554,290


	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Investments:
U.S. treasury bills	$	314,957	$	83	$	(482	)	$	314,558
U.S. agency securities		185,672		24		(353	)		185,343
Total investments with a maturity of one year or less		500,629		107		(835	)		499,901

U.S. treasury bills		100,917		591		(58	)		101,450
U.S. agency securities		5,000		—		(1	)		4,999
Total investments with a maturity of one to two years		105,917		591		(59	)		106,449
Total investments	$	606,546	$	698	$	(894	)	$	606,350

The following tables summarize the Company's available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type and length of time in a continuous unrealized loss position:

         
        June 30, 2024

         
        Less than 12 Months

        12 Months or Longer

        Total

         
        Fair Value

        Unrealized
Losses

        Fair Value

        Unrealized
Losses

Relay Therapeutics, Inc. [RLAY] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-02]
10-K	[2024-02-22]
10-Q	[2023-11-02]
10-Q	[2023-08-08]
10-Q	[2023-05-04]
10-K	[2023-02-23]
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-24]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
S-1	[2021-04-28]
10-K	[2021-03-25]
10-Q	[2020-11-12]
10-Q	[2020-08-27]
S-1	[2020-06-24]