Relay Therapeutics, Inc. (RLAY): A Bull Case Theory

We came across a bullish thesis on Relay Therapeutics, Inc. (RLAY) on Substack by Steve Wagner. In this article, we will summarize the bulls’ thesis on RLAY. Relay Therapeutics, Inc. (RLAY)’s share was trading at $3.15 as of May 6^th.

Relay Therapeutics (RLAY) is taking decisive steps to secure its future by doubling down on its lead program, RLY-2608, while implementing aggressive cost control measures to extend its cash runway. With $710 million in cash as of Q1 2025, the company has extended its financial runway into 2029, giving it enough capital to advance RLY-2608 through pivotal trials and beyond key data readouts. This conservative yet strategic shift comes with significant operational streamlining: RLAY has trimmed its research spending by roughly 80% and reduced headcount by around 70 employees, resulting in a leaner structure and a modest year-over-year improvement in net loss to $77.1 million. Most notably, the company has narrowed its pipeline from four programs to one, licensing out RLY-4008 to Elevar Therapeutics and pausing its NRAS and Fabry disease programs. This refined focus places RLY-2608 squarely at the core of the company’s clinical and commercial ambitions.

RLY-2608, a mutant-selective PI3Kα inhibitor, is being developed for tumors with PIK3CA mutations, most prominently in HR+/HER2- advanced breast cancer. The drug has shown promising early efficacy, with median progression-free survival of 9.2 months and a 33% overall response rate in heavily pretreated patients, while maintaining a manageable safety profile. These encouraging Phase 1/2 results have justified the advancement into a pivotal Phase 3 trial, ReDiscover-2, which is scheduled to begin in mid-2025. This study will evaluate RLY-2608 in combination with fulvestrant in a second-line breast cancer population, aiming to confirm prior efficacy signals in a broader patient group. In parallel, RLAY has initiated a Phase 1 trial of RLY-2608 in PI3K-driven vascular malformations, expanding its clinical footprint into a second indication and leveraging the drug’s targeted mechanism in a non-oncology setting. Early proof-of-concept data from this trial is expected to emerge during the extended cash runway period.

RLAY is also exploring combination therapies involving RLY-2608, including potential triplet regimens with CDK4/6 inhibitors. An important dataset from these ongoing trials is expected at ASCO in June, which could further validate RLY-2608’s role in next-generation cancer treatment. Altogether, the company’s sharpened focus, disciplined financial management, and expanding clinical strategy around RLY-2608 position it as a high-conviction biotech story. While the path forward is centered around a single program, the strength of early data, long cash runway, and multiple shots on goal give RLAY a compelling and asymmetric risk/reward profile heading into 2025 and beyond.

Relay Therapeutics, Inc. (RLAY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held RLAY at the end of the fourth quarter which was 30 in the previous quarter. While we acknowledge the risk and potential of RLAY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RLAY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.