Precommercial drug developers cannot be evaluated using typical financial metrics like revenue, cash flow, and income. Investors should still pay attention to certain line items and trends within financial statements.

Relay Therapeutics ended 2024 with $781 million in cash, which can fund the current operating plan into the second half of 2027. Management is prepared to go all-in completing the pivotal study of RLY-2608 even if it means pausing all other programs.

That might not be the most encouraging way to look at things, but the first potential approval for RLY-2608 in 2L HR+/HER2- breast cancer could make Relay Therapeutics a $5 billion company by the end of the decade. It's a rare opportunity that makes sense to protect – and management is treating it accordingly.

The precision medicine company reported just $54.1 million in R&D cash expenses in Q4 2024, which marked the lowest since Q2 2022. Licensing lirafugratinib has reduced clinical trial expenses. Meanwhile, the business counted 261 employees at the end of 2024, or roughly 20% lower than each of the previous two years.

Investors should be encouraged by the fiscal restraint of management. Investors should also acknowledge that clinical trial expenses will increase when the new NRAS inhibitor program and Fabry disease program transition out of preclinical development. The company can delay clinical starts for these assets to mitigate increases in clinical trial expenses, if needed.