Relay Therapeutics, Inc. (NASDAQ:RLAY) has caught the attention of Wall Street analysts, who see massive upside potential in the biotech stock. With an average price target of $22.40, analysts forecast 98.23% upside for Relay from current levels around $11.30.
The Cambridge, Massachusetts-based company develops new treatments for several forms of cancer. Its leading drug candidates target specific genetic mutations that drive tumor growth.
By precisely targeting these mutations, Relay aims to develop therapies that are both more effective and have fewer side effects than traditional chemotherapy.
Relay’s approach is generating significant excitement among analysts and investors. Here are some key facts about the company:
- Relay currently has four drug candidates in clinical trials, each targeting a different genetic mutation associated with various cancers. Its lead candidate, RLY-4008, is being tested in patients with advanced solid tumors harboring FGFR2 alterations.
- The company uses its proprietary Dynamo platform, which integrates advanced computational and experimental techniques, to identify potential drug targets and develop novel small molecule therapies against them. This platform allows Relay to design treatments faster and more efficiently.
- In addition to its internal R&D efforts, Relay has a partnership with D. E. Shaw Research to leverage the hedge fund’s computational power, resulting in even greater drug discovery capabilities. D. E. Shaw is known for its quantitative, technology-driven investment approach.
- Relay has an impressive roster of experienced biotech executives and scientists leading its efforts. Its co-founder Sanjiv Patel previously held senior roles at Allergan, Strattera, and AbbVie.
- As of late 2023, 27 hedge funds tracked by Insider Monkey held positions in Relay. Top investor Eli Casdin’s Casdin Capital owned over $58 million worth of shares, indicating strong smart money confidence.
Why Analysts See Huge Upside Ahead
Several factors explain analysts’ bullish outlook and lofty price targets on Relay stock:
1. Promising Data on Lead Drug Candidate
In June 2022, Relay announced positive results from a Phase 1 clinical trial evaluating RLY-4008 in patients with advanced solid tumors harboring FGFR2 alterations. The data showed RLY-4008 demonstrated favorable tolerability along with preliminary anti-tumor activity. One gastric cancer patient saw their tumor shrink by 20%.
These encouraging early results support RLY-4008’s potential to treat cancers driven by FGFR2 mutations. Relay is now expanding trials to gather more data on the drug’s efficacy.
2. Multiple Shots on Goal
In addition to RLY-4008, Relay has three other novel candidates in its pipeline targeting different genetic drivers of cancer, including SHP2 and KRAS. Each represents a billion-dollar market opportunity if approved.
Having multiple assets mitigates risk, as the company isn’t relying on a single drug candidate. If one fails, the others still have potential. This pipeline optionality boosts Relay’s overall chances of success.
3. Huge Unmet Need in Precision Oncology
Cancers driven by specific genetic mutations make up over 25% of tumors. But few precision therapies exist targeting these mutations.
Relay is at the forefront of developing the next generation of precision oncology drugs. Its treatments could leapfrog conventional chemo to provide more tailored, mutation-specific therapies benefiting patients. Capturing even a fraction of this enormous unmet need represents a massive market opportunity.
4. Takeover Potential
As a leader in precision oncology R&D with a promising pipeline, Relay stands out as an attractive acquisition target for larger pharma companies. The past year saw mega-deals like Pfizer buying Trillium Therapeutics for $2.3 billion and Merck acquiring Acceleron Pharma for $11.5 billion.
With its innovative platform and targeted candidates, Relay could easily fetch a sizable premium in a takeover from a player looking to bolster its cancer drug portfolio.
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Bottom Line
With multiple shots on goal, a cutting-edge platform, and expertise honed in precision oncology, Relay Therapeutics represents an exciting emerging biotech name. The 98% upside forecast by analysts signals confidence in the company’s long-term potential.
While clinical-stage biotech investing comes with risks, Relay’s progress so far and its upcoming catalysts make it a compelling opportunity. For investors comfortable with the inherent volatility of the biotech sector, this high-upside name warrants a close look.