Hook & thesis
Relay Therapeutics (RLAY) has ripped higher into the mid-$8s on a wave of optimism around its PI3Kα program RLY-2608 (zovegalisib) and renewed analyst interest. While I cannot independently verify every item of media coverage in real time from the data here, the company's recent clinical communications on zovegalisib and an uptick in trading activity are visible in public filings and the price tape. That combination - positive subset analyses + fresh buy-side attention - is the engine behind the current rally.
For traders my call is straightforward: this is a swing trade to the long side, size small-to-moderate, with strict risk control. Buy into the momentum while the market still prices the upside of RLY-2608, but treat the position as a binary event trade: upside if data continues to surprise and downside if the story cools or the group re-prices biotech risk. Entry, stop and targets are below.
What Relay does and why the market should care
Relay Therapeutics is a clinical-stage precision-medicine biotech that combines computation and experiment to target hard-to-drug proteins. The company’s pipeline includes RLY-4008, RLY-2608 (zovegalisib) and other discovery-stage programs. The market reaction today centers on RLY-2608 — a PI3Kα inhibitor being tested in metastatic breast cancer in combination with fulvestrant, where the company (per its press releases) has reported subset analyses and updated interim data showing maturation of progression-free survival.
Why investors care: PI3Kα remains an established target in hormone receptor-positive, HER2-negative breast cancer, especially in tumors harboring PIK3CA mutations. A positive data readthrough - even from a subset analysis or a maturing PFS curve - can materially expand the commercial opportunity and spur takeout chatter or partnership interest for a company with Relay’s platform. In short, RLY-2608 is a near-term, binary value driver inside a company that otherwise has no commercial revenue stream.
Support from the numbers (what the filings show)
Use the filings to frame risk/reward. The Q3 fiscal 2025 filing (filed 11/06/2025) shows:
- Cash and liquidity - Current assets: $624,014,000 and “other current assets” of $600,175,000 (Q3 FY2025). That is the closest proxy to available cash/reserves in the filing.
- Burn - Net cash flow from operating activities, Q3 FY2025: -$62,119,000 (quarterly). That implies an approximate burned run-rate near the low-to-mid $60m per quarter today; at that pace current assets cover roughly 10 quarters (about 2.5 years), assuming no material change in spend or large, immediate financings.
- Recent P&L - Q3 FY2025 operating expenses were $80.39m, with net loss of ~$74.15m. Operating expenses have moved from ~$100.37m (Q1 FY2025) to ~$77.52m (Q2) to ~$80.39m (Q3), suggesting the company has trimmed or re-phased certain programs versus earlier in the year.
- Shares outstanding - Basic average shares in Q3 FY2025: 172,389,209. Using the last visible quote (~$8.60), that implies an approximate market capitalization of ~$1.48 billion (172.39m x $8.60). That is an implied valuation for a clinical-stage company with no recurring revenues and a binary oncology catalyst in the near term.
Trade plan (actionable)
Note: this is a momentum, event-driven trade. Size accordingly and treat as high-risk.
- Direction: Long.
- Entry: 8.00 - 8.80. If you missed the initial pop above $8.80, wait for a pullback into the low-$8s or a clean 5-10% dip with volume drying up.
- Stop-loss: 6.80 (roughly -20% from a mid-entry of $8.50). A break and hold below $6.80 signals the momentum has failed and that downside risk is accelerating.
- Targets:
- Target 1 (near-term): $11.00 - tactical sell into the first meaningful resistance and profit-taking (roughly +30% from mid-entry).
- Target 2 (swing): $15.00 - if positive incremental data or visible analyst upgrades/support arrive (+75% from mid-entry).
- Target 3 (optional hold): $22.00 - a scenario where a major partnership, buyout rumor or unexpectedly strong pivotal readout re-rates the stock (use trailing stops if you pursue this leg).
Why I like this trade (concise)
- The stock is moving on a discrete clinical story (RLY-2608) where incremental data can produce large re-ratings in either direction.
- Balance sheet is healthy: current assets of ~$624m give management runway to advance programs without immediate dilution pressure; quarterly burn is ~-$62m (Q3), which is manageable relative to the cash stockpile.
- Market cap implied by Q3 average shares and the $8.60 quote is about $1.48b - the market is pricing a sizable outcome for a single program, which creates asymmetric trading opportunities for event-driven money if clinical readouts continue to look favorable.
Catalysts to watch (2-5)
- Additional maturation or subgroup PFS/OS data for RLY-2608 in metastatic breast cancer (company has released subset analyses: keep an eye out for more granular data releases or presentations).
- Analyst coverage/benchmarks: further upgrades or published notes (reported buy-side interest can sustain momentum).
- Partnership/licensing discussions or business-development announcements tied to RLY-2608 or related PI3K programs.
- Clinical readouts from companion programs or safety updates that could affect PI3K class sentiment.
Risks and counterarguments
This is a high-risk trade. Below are the primary risks and a short counterargument to the bull case.
- Binary clinical risk - RLY-2608's upside depends on clinical evidence. Subset analyses can be noisy and sometimes fail to hold up under broader scrutiny; a disappointing follow-up readout would likely trigger steep downside.
- Valuation vs. no revenue - The company trades at an implied market cap near $1.48b despite having no commercial revenues. That places heavy weight on future clinical success to justify the valuation.
- Dilution risk - Relay has done public offerings in the past (a secondary offering in 09/11/2024 was associated with a sharp pullback). If management decides to accelerate funding for multiple programs or a larger acquisition, equity dilution remains possible.
- Class/competitive risk - PI3K inhibitors are an established but crowded class. Superior safety or efficacy from a competitor could blunt zovegalisib’s impact even if Relay posts modestly positive data.
- Momentum fade / sentiment reversal - This move appears at least partly driven by optimism and headlines. If the supposed Oppenheimer upgrade or media attention proves transitory, momentum funds and short-term holders can exit quickly and amplify the drop.
Counterargument to the bull case: Much of today’s upside is driven by sentiment and subset analysis headlines rather than a clean, randomized pivotal readout. If additional data does not corroborate early subset signals or if class safety issues re-emerge, the existing valuation can compress rapidly.
What would change my mind
I'll upgrade the trade from tactical swing to a position-sized, multi-quarter holding if any of the following occur: a clear pivotal or randomized readout shows robust PFS/OS benefit for RLY-2608; a strategic partnership or licensing agreement that significantly de-risks commercialization; or visible guidance from management that materially reduces the probability of near-term dilution.
Conversely, I will exit quickly if: a negative safety signal shows up in the PI3K program; the company announces an equity raise that meaningfully dilutes current shareholders; or the stock breaks and stays below the $6.80 stop with expanding volume.
Bottom line
RLAY is an event-driven biotech trade: attractive on momentum and backed by a healthy balance sheet (~$624m in current assets) and a manageable quarterly cash burn (~-$62m in Q3 FY2025). The upside is tied to zovegalisib data and continued analyst/buy-side interest; the downside is binary and steep if the clinical story cools.
If you participate, treat this as a swing trade: enter in the $8.00-$8.80 band, place a hard stop at $6.80, and sell into strength at $11 and $15 unless material new information justifies holding for a larger re-rate.
Disclosure: This is a trade-idea, not investment advice. Size positions to your risk tolerance and consider the high binary risk inherent to clinical-stage biotech names.