On Monday, H.C. Wainwright maintained its Buy rating on Relay Therapeutics (NASDAQ:RLAY) shares with a steady price target of $19.00. The firm's endorsement follows the recent U.S. Food and Drug Administration (FDA) approval of Roche's Itovebi (inavolisib) for a specific breast cancer treatment.
This approval is significant as it is based on the outcomes of the Phase 3 INAVO120 trial, which demonstrated that Itovebi, in combination with Ibrance (palbociclib) and Faslodex (fulvestrant), substantially reduced the risk of disease progression or death in patients with endocrine-resistant, PIK3CA-mutated, HR+, HER2- advanced or metastatic breast cancer.
The INAVO120 trial compared the efficacy of the Itovebi combination therapy against Ibrance and Faslodex alone. Results, which were presented at the San Antonio Breast Cancer Symposium (SABCS) in 2023, showed a 57% reduction in the risk of disease worsening or death for the combination therapy group, translating to a median progression-free survival (PFS) of 15.0 months, compared to just 7.3 months for the control group. The analysis also indicated a favorable overall survival (OS) rate with a stratified hazard ratio (HR) of 0.64.
M, the treatment combination resulted in a 58.4% objective response rate (ORR), which is significantly higher than the 25% ORR observed with the control regimen. The median duration of response (mDOR) also favored the combination therapy at 18.4 months versus 9.6 months for the control.
While the combination therapy was associated with higher incidences of certain side effects such as stomatitis, hyperglycemia, and diarrhea, the majority of patients were able to continue treatment with dose adjustments or interruptions, with only 6.8% discontinuing due to adverse events (AEs).
The analyst's reiterated Buy rating and price target reflect confidence in Relay Therapeutics' position following the FDA's nod to Roche's treatment, which includes Relay's drug candidate. Relay Therapeutics' share value is anticipated to be influenced by the clinical advancements and regulatory milestones achieved by its partnered therapies in the oncology space.
In other recent news, Relay Therapeutics reported promising results from its Phase 1 ReDiscover trial, showing a 33.3% objective response rate and a median progression-free survival of 9.2 months. This led to adjustments in outlooks from several analyst firms. H.C. Wainwright raised its price target for Relay Therapeutics to $19.00 while maintaining a Buy rating.
Similarly, Stifel maintained its Buy rating with a steady price target of $28.00. Jefferies upgraded Relay Therapeutics stock from Hold to Buy and increased the price target to $16.00. However, Oppenheimer downgraded their rating from Outperform to Perform due to concerns about the selectivity profile of RLY-2608.
Relay Therapeutics also initiated a $200 million underwritten public offering of its common stock. The company reported a cash position of approximately $688 million as of the second quarter of 2024, expected to fund operations into 2026. These recent developments reflect Relay Therapeutics' progress in its drug development efforts and financial forecasts.
InvestingPro Insights
To complement the analysis of Relay Therapeutics (NASDAQ:RLAY) following the FDA approval of Roche's Itovebi, which includes Relay's drug candidate, InvestingPro data provides additional context for investors.
Relay Therapeutics currently has a market capitalization of $1.1 billion, reflecting the market's valuation of its potential in the oncology space. Despite the positive news, the company's financials reveal some challenges. InvestingPro data shows that Relay's revenue for the last twelve months as of Q2 2024 was $35.21 million, with a staggering revenue growth of 3637.58% over the same period. However, this growth comes with significant operational costs, as evidenced by the operating income margin of -1060.46%.
Two relevant InvestingPro Tips highlight both strengths and risks:
1. Relay Therapeutics holds more cash than debt on its balance sheet, which provides financial flexibility to continue its research and development efforts.
2. The company is quickly burning through cash, a common characteristic of biotech firms investing heavily in drug development.
These insights underscore the speculative nature of investing in early-stage biotech companies like Relay Therapeutics. While the FDA approval of Itovebi is a positive signal for Relay's drug development approach, investors should be aware of the company's current financial position and cash burn rate.
For a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into Relay Therapeutics' investment potential.
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