Relay Therapeutics 2025 Q1 Earnings Narrowed Losses Despite Revenue Decline

Relay Therapeutics (RLAY) reported its fiscal 2025 Q1 earnings on May 5th, 2025. The company saw a 23.3% decline in total revenue, falling to $7.68 million from $10.01 million in the same quarter of the previous year. Despite the revenue drop, Relay Therapeutics achieved a 25.8% improvement in earnings per share, narrowing losses to $0.46 per share from a loss of $0.62 per share in 2024 Q1. The company's net loss also reduced to $77.06 million, a 5.3% improvement from the prior year's $81.39 million net loss.

The earnings results did not meet market expectations, and the company's guidance remained in line with previous projections.

Revenue

Relay Therapeutics reported a revenue of $7.68 million for the first quarter of 2025, marking a 23.3% decrease from $10.01 million in the previous year. This decline was primarily due to the completion of the Elevar licensing agreement obligations.

Earnings/Net Income

Relay Therapeutics narrowed its net loss to $77.06 million in Q1 2025, showing a 5.3% improvement over the same period last year. Despite ongoing financial challenges, the company reduced its losses to $0.46 per share from $0.62 per share in 2024 Q1. The EPS improvement reflects better financial management and strategic cost reductions.

Price Action

The stock price of Relay Therapeutics experienced an upward trend, increasing by 2.79% on the latest trading day, 1.84% over the past week, and surging 33.33% month-to-date.

Post-Earnings Price Action Review

Relay Therapeutics' post-earnings price action strategy of buying shares after earnings release and holding for 30 days has historically resulted in significant losses. Over the past five years, this approach yielded a backtested return of -70.47%, reflecting poor risk-adjusted performance with a Sharpe ratio of -0.41. The strategy's maximum drawdown reached -87.69%, and volatility was high at 56.55%, indicating substantial risk and potential for considerable losses. This performance underscores the challenges investors face in achieving positive returns through this strategy, given the company's volatile stock movements and financial headwinds.

CEO Commentary

"2025 is a year of execution across a range of high value clinical programs," said Sanjiv Patel, M.D., President and Chief Executive Officer of Relay Therapeutics. The ongoing changes to the cost base aim to fully fund key initiatives, including generating topline data from the ReDiscover-2 trial and clinical proof-of-concept data in vascular malformations. Strategic cost reductions have been implemented, allowing for the extension of the cash runway into 2029, while significant reductions in research spending have been made, focusing efforts on the highest value areas.

Guidance

Relay Therapeutics expects its current cash, cash equivalents, and investments, totaling approximately $710 million as of March 31, 2025, to sufficiently fund its operating expenses and capital expenditures into 2029. The company is on track to initiate the Phase 3 ReDiscover-2 trial mid-2025 and aims to advance its vascular malformations trial through clinical proof-of-concept data. The strategic focus on reducing costs is anticipated to support the completion of key clinical milestones beyond topline data readouts.

Additional News

Relay Therapeutics has recently announced the initiation of its Phase 3 ReDiscover-2 trial, set to begin by mid-2025, alongside the successful launch of a Phase 1 trial for vascular malformations. The company has strategically narrowed its research focus, reducing its research-stage programs from four to one and decreasing its workforce by approximately 70 employees to streamline operations and enhance financial efficiency. Furthermore, Relay has executed a global out-license of RLY-4008 with Elevar Therapeutics, Inc., positioning itself for potential downstream economic benefits. These moves reflect Relay's commitment to advancing its clinical pipeline while maintaining a prudent financial strategy to extend its cash runway into 2029.