Sophisticated computational tools have guided Relay Therapeutics in its efforts to develop new drugs based on analysis of the movement and shape of disease-causing proteins.
Now the Cambridge, MA, biotech is looking to tap the public markets to bulk up company coffers and get its two lead drug candidates into mid-stage clinical trials as potential treatment for cancers.
In documents filed Wednesday with regulators, Relay set a preliminary target of $200 million for its IPO. The company is looking to list on the Nasdaq exchange under the ticker symbol “RLAY.”
Founded in 2016, Relay has raised $520 million across three rounds of private financing, including a whopping $400 million haul in December 2018. The money has fueled its development of drugs developed to block cancer-causing proteins, which it has done by applying computational techniques to analyze protein motion to understand more about their roles in disease.
The techniques it uses include deploying a supercomputer designed by a research group helmed by David Shaw, one of the company’s co-founders. The company is headed by president and CEO Sanjiv Patel (pictured), who prior to joining Relay spent more than a decade at Allergan, where he most recently served as the company’s chief strategy officer.
This year the company moved its first drug candidate, RLY-1971, into the clinic, starting a Phase 1 trial to evaluate the compound as an inhibitor of a protein called SHP2. Relay’s next most advanced candidate, RLY-4008, is designed to inhibit fibroblast growth factor receptor 2. Relay plans to move that program into the clinic later this year.
Another candidate, RLY-PI3K1047, which the company describes as the first in a “franchise” of programs targeting cancer-associated variants of phosphoinositide 3-kinase alpha, is in preclinical development. Relay also has five discovery-stage programs across precision oncology and genetic disease, according to its prospectus.
According to the plan sketched out in the filing, Relay will use its IPO funds to get both RLY-197 and RLY-4008 partway through Phase 2/3 trials; to fund a portion of the early-stage tests it has planned for RLY-PI3K1047; and to continue advancing the discovery programs.
As recently as last month it was an open question when or if biotechs could rely on the IPO market to raise fresh funds—or to provide liquidity to investors.
At the start of the year the biotech IPO market was looking hot. Among other biotechs that made public market debuts in January, Black Diamond Therapeutics raised $201 million from its IPO; in its first day of trading, the cancer drug developer’s stock price popped more than 108 percent.
In February, 13 IPOs priced but the window nearly slammed shut the following month as the coronavirus pandemic shook the markets. Following three lackluster months, however investors’ appetites bounced back in a big way in June.
The year’s tally of IPOs that have priced so far, a total of 56, includes 21 this month, according to IPO research firm Renaissance Capital. (The firm’s count excludes companies with a market cap of less than $50 million, direct listings, closed-end funds, and special purpose acquisition companies, or SPACs, also known as “blank-check” companies.)
Driven by biotech, healthcare made up nearly two-thirds of second quarter IPO activity, according to a Renaissance report. Companies collectively raised more than $15 billion, with nearly every offering raising more than it had planned or pricing above the midpoint of its expected range and shares rising an average of 39 percent on their first day of trading, Renaissance said.
According to the Relay prospectus, SoftBank Vision Fund currently owns about 40 percent of its shares while entities affiliated with Third Rock Ventures hold about 20 percent.