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What changed in Relay Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Relay Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+341 added−409 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in Relay Therapeutics, Inc.'s 2023 10-K

341 paragraphs added · 409 removed · 294 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

195 edited+23 added−85 removed513 unchanged
Biggest changeSimilarly, in the EU, the European Commission, upon the recommendation of the EMA’s Committee for Orphan Medicinal Products, grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than 5 in 10,000 persons in the EU and for which no satisfactory method of diagnosis, prevention, or treatment has been authorized for marketing in the EU (or, if a method exists, the product would be of a significant benefit to those affected by the condition).
Biggest changeSimilarly, in the EU, the European Commission, upon the recommendation of the EMA’s Committee for Orphan Medicinal Products, grants orphan designation in respect of a product if it can be shown that (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify the necessary investment in its development; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.
Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to: • successfully complete preclinical studies; • successfully enroll subjects in, and complete, clinical trials; • have our IND applications go into effect for our planned clinical trials or future clinical trials; • receive regulatory approvals from applicable regulatory authorities; • initiate and successfully complete all safety studies required to obtain U.S. and foreign marketing approval for our product candidates; • establish commercial manufacturing capabilities or make arrangements with third-party manufacturers for clinical supply and commercial manufacturing; • obtain and maintain patent and trade secret protection or regulatory exclusivity for our product candidates; • launch commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; • obtain and maintain acceptance of the product candidates, if and when approved, by patients, the medical community and third-party payors; • effectively compete with other therapies; • obtain and maintain healthcare coverage and adequate reimbursement; • enforce and defend intellectual property rights and claims; • take precautionary measures to help minimize the risk of COVID-19 or any future pandemics or similar outbreaks to our employees; and • maintain a continued acceptable safety profile of the product candidates following approval.
Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to: • successfully complete preclinical studies; • successfully enroll subjects in, and complete, clinical trials; • have our IND applications go into effect for our planned clinical trials or future clinical trials; • receive regulatory approvals from applicable regulatory authorities; • initiate and successfully complete all safety studies required to obtain U.S. and foreign marketing approval for our product candidates; • establish commercial manufacturing capabilities or make arrangements with third-party manufacturers for clinical supply and commercial manufacturing; • obtain and maintain patent and trade secret protection or regulatory exclusivity for our product candidates; • launch commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; • obtain and maintain acceptance of the product candidates, if and when approved, by patients, the medical community and third-party payors; • effectively compete with other therapies; • obtain and maintain healthcare coverage and adequate reimbursement; • enforce and defend intellectual property rights and claims; • take precautionary measures to help minimize the risk of any future pandemics or outbreaks similar to COVID-19 to our employees; and • maintain a continued acceptable safety profile of the product candidates following approval.
If disputes over intellectual property that we co-own or we own individually prevent or impair our ability to maintain our current collaboration arrangements on acceptable terms, or undermine our ability to successfully control the intellectual property necessary to protect our product candidates, we may be unable to successfully develop and commercialize the affected product candidates.
If disputes over intellectual property that we co-own or we own individually prevent or impair our ability to maintain our current collaboration arrangements on acceptable terms, or undermine our ability to successfully control the intellectual property necessary to protect our product candidates, we may be unable to successfully develop and commercialize the affected product candidates.
Uncertainties or disagreements around our rights under any such intellectual property may undermine our ability to partner our programs with third parties. In addition, the DESRES Agreement is complex and certain provisions may be susceptible to multiple interpretations.
Uncertainties or disagreements around our rights under any such intellectual property may undermine our ability to partner our programs with third parties. In addition, the DESRES Agreement is complex and certain provisions may be susceptible to multiple interpretations.
Any collaborations we have entered into or will enter into may pose risks, including the following: • Collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations; • Collaborators may not perform their obligations as expected; • The clinical trials conducted as part of these collaborations may not be successful; • Collaborators may not pursue development and/or commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; 60 • Collaborators may delay clinical trials, provide insufficient funding for clinical trials, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • We may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates; • Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • Product candidates developed in collaboration with us may be viewed by any collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • A collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product candidate; • Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of any programs or product candidates, may cause delays or termination of the research, development, manufacture or commercialization of such programs or product candidates, may lead to additional responsibilities for us with respect to such programs or product candidates or may result in litigation or arbitration, any of which would be time-consuming and expensive; • Collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation.
Any collaborations we have entered into or will enter into may pose risks, including the following: • Collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations; • Collaborators may not perform their obligations as expected; • The clinical trials conducted as part of these collaborations may not be successful; • Collaborators may not pursue development and/or commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; • Collaborators may delay clinical trials, provide insufficient funding for clinical trials, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • We may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates; • Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • Product candidates developed in collaboration with us may be viewed by any collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • A collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product candidate; • Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of any programs or product candidates, may cause delays or termination of the research, development, manufacture or commercialization of such programs or product candidates, may lead to additional responsibilities for us with respect to such programs or product candidates or may result in litigation or arbitration, any of which would be time-consuming and expensive; • Collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation.
Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • challenges maintaining uniform procedures, controls and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; 88 • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; • any collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us; • diversion of management’s attention and company resources from existing operations of the business; • inconsistencies in standards, controls, procedures, and policies; • the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • challenges maintaining uniform procedures, controls and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; 76 • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; • any collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us; • diversion of management’s attention and company resources from existing operations of the business; • inconsistencies in standards, controls, procedures, and policies; • the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Furthermore, any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security compromises or breaches that result in the unauthorized access, use, acquisition, disclosure, release or transfer of sensitive information, including physician data, patient data, or any personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
Furthermore, any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security compromises or breaches that result in the unauthorized access, use, acquisition, disclosure, release or transfer of confidential or sensitive information, including physician data, patient data, or any personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
For example, Genentech has the first right to enforce or defend certain of our intellectual property rights under our collaboration, and although we may have the right to assume the enforcement and defense of such intellectual property rights if Genentech does not, our ability to do so may be compromised by Genentech’s actions; • Disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations; • Collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and • Collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
For example, Genentech has the first right to enforce or defend certain of our intellectual property rights under our collaboration, and although we may have the right to assume the enforcement and defense of such intellectual property rights if Genentech does not, our ability to do so may be compromised by Genentech’s actions; • Disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations; 51 • Collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and • Collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights under our collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and • the priority of invention of patented technology.
Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights under our collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and 64 • the priority of invention of patented technology.
Risks Related to the Regulatory Agency Review Process Disruptions at the FDA, the SEC and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
Risks Related to the Regulatory Agency Review Process Disruptions at the FDA, the SEC and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being 74 developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for 71 us, we may in the future be subject to claims that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor.
Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may in the future be subject to claims that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor.
Such authorities may impose a suspension or termination or clinical hold due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or clinical trial site by the FDA or other regulatory authorities, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Such authorities may impose a suspension or termination or clinical hold due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial 40 operations or clinical trial site by the FDA or other regulatory authorities, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
While we seek to maintain adequate inventory of the API, drug product and starting materials used in our product candidates, any interruption or delay in the supply of components or materials, or our inability to obtain such API, drug product or starting materials from alternate sources at acceptable prices in a timely manner could impede, delay, limit or prevent our development efforts, which could harm our business, results of operations, financial condition and prospects.
While we seek to maintain adequate inventory of the API, drug product and starting materials used in our product candidates, any interruption or delay in the supply of components or materials, or our inability to obtain such API, drug product or starting 50 materials from alternate sources at acceptable prices in a timely manner could impede, delay, limit or prevent our development efforts, which could harm our business, results of operations, financial condition and prospects.
Risks Related to Government Regulation Risks Related to Regulatory Approval Even if we receive regulatory approval for any of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, and our product candidates could be subject to post-market study requirements, marketing and labeling restrictions, and even recall or market withdrawal if unanticipated safety issues are discovered following approval, which may result in significant additional expense.
Risks Related to Government Regulation Risks Related to Regulatory Approval Even if we receive regulatory approval for any of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, and our product candidates, if approved, could be subject to post-market study requirements, marketing and labeling restrictions, and even recall or market withdrawal if unanticipated safety issues are discovered following approval, which may result in significant additional expense.
In addition, receiving accelerated approval does not assure that the product’s accelerated approval will eventually be converted to a traditional approval. 83 Risks Related to Healthcare Legislative Reform The FDA, the EMA and other regulatory authorities may implement additional regulations or restrictions on the development and commercialization of our product candidates, and such changes can be difficult to predict.
In addition, receiving accelerated approval does not assure that the product’s accelerated approval will eventually be converted to a traditional approval. Risks Related to Healthcare Legislative Reform The FDA, the EMA and other regulatory authorities may implement additional regulations or restrictions on the development and commercialization of our product candidates, and such changes can be difficult to predict.
Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical studies and then conduct the required clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete 47 and is uncertain as to outcome.
Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical studies and then conduct the required clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome.
It is possible that our product candidates, including any product candidates we may seek to develop in the future, will never obtain regulatory approval. We have only limited experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party CROs and/or regulatory consultants to assist us in this process.
It is possible that our product candidates, including any product candidates we may seek to develop in the future, will never obtain regulatory approval. We have only limited experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party CROs and/or 44 regulatory consultants to assist us in this process.
In addition, regulatory authorities may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product 53 candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.
In addition, regulatory authorities may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.
If these in-licenses are 73 terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates.
If these in-licenses are terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates.
If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed. We do not have the ability to independently conduct clinical trials.
If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we 47 may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed. We do not have the ability to independently conduct clinical trials.
Additionally, under FDORA, sponsors of approved drugs must provide six months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed.
Additionally, 66 under FDORA, sponsors of approved drugs must provide six months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed.
In connection with the clinical development of our product candidates for certain indications, we have engaged and may continue to engage third parties to develop or obtain access to in vitro companion diagnostic tests to identify patient subsets within a 78 disease category who may derive selective and meaningful benefit from our product candidates.
In connection with the clinical development of our product candidates for certain indications, we have engaged and may continue to engage third parties to develop or obtain access to in vitro companion diagnostic tests to identify patient subsets within a disease category who may derive selective and meaningful benefit from our product candidates.
The party that is preparing, filing, prosecuting and maintaining a patent that covers joint work product also has the right to enforce such patent against infringers. 68 The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation.
The party that is preparing, filing, prosecuting and maintaining a patent that covers joint work product also has the right to enforce such patent against infringers. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation.
Average review times at the agency have fluctuated in recent years as a result. In 86 addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
In addition, this concentration of ownership might adversely affect the market price of our common stock by: • delaying, deferring or preventing a change of control of us; • impeding a merger, consolidation, takeover or other business combination involving us; or • discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
In addition, this concentration of ownership might adversely affect the market price of our common stock by: • delaying, deferring or preventing a change of control of us; 80 • impeding a merger, consolidation, takeover or other business combination involving us; or • discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 63 Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business.
However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection for our inventions and increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could harm our business, results of operations and financial condition. The U.S.
However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection for our inventions and increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could harm our business, results of operations and financial condition. 65 The U.S.
In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
In 75 particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced elements of our operations to third parties, and as a result we collaborate with a number of third-party CROs, vendors, and other contractors and consultants who have access to our confidential information.
It is critical that we do so in a secure manner to maintain the confidentiality, integrity, and availability of such information. We also have outsourced elements of our operations to third parties, and as a result we collaborate with a number of third-party CROs, vendors, and other contractors and consultants who have access to our confidential information.
Even if the side effects do not preclude the product from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved product due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition and prospects.
Even if the side effects do not preclude the product from obtaining or maintaining marketing approval, undesirable side effects may inhibit market 42 acceptance of the approved product due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition and prospects.
The key competitive factors affecting the success of all of our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third-party payors. The insurance coverage and reimbursement status of newly-approved products is uncertain.
The key competitive factors affecting the success of all of our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third-party payors. 46 The insurance coverage and reimbursement status of newly-approved products is uncertain.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide. 63 We have no products approved for commercial sale and we have not generated any revenue from product sales. Our ability to become profitable depends upon our ability to generate revenue.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide. We have no products approved for commercial sale and we have not generated any revenue from product sales. Our ability to become profitable depends upon our ability to generate revenue.
If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to 81 criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment.
If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment.
If the market opportunities for our product candidates are smaller than we estimate or if any approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.
If the market opportunities for our product candidates are smaller than we estimate or if any approval that we 45 obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.
If we are unable to successfully develop companion diagnostics for these therapeutic product candidates, or experience delays in doing so, the development of these therapeutic product candidates may be adversely affected, these therapeutic product candidates may not obtain marketing approval, and we may not realize the full commercial potential of any of these therapeutics that obtain marketing approval.
If we are unable to successfully develop companion diagnostics for these therapeutic product candidates, or experience delays in doing so, the development of these therapeutic product candidates may be adversely affected, these therapeutic product candidates may not obtain marketing approval, and we may not realize the full commercial potential of any of these therapeutics that obtain 69 marketing approval.
If significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to our clinical trials, patients may drop out of our clinical trials, or we may be 50 required to abandon the clinical trials or our development efforts of one or more product candidates altogether.
If significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to our clinical trials, patients may drop out of our clinical trials, or we may be required to abandon the clinical trials or our development efforts of one or more product candidates altogether.
If these collaborations are not successful, our business could be adversely affected .” for a discussion of risks related to the protection of our intellectual property rights under our collaborations. Most of the research and development for our programs has been performed under the DESRES Agreement. Under the DESRES Agreement, D. E.
If these collaborations are not successful, our business could be adversely affected ." for a discussion of risks related to the protection of our intellectual property rights under our collaborations. Most of the research and development for our programs has been performed under the DESRES Agreement. Under the DESRES Agreement, D. E.
If the patent protection provided by the patents and patent applications we hold or pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.
If the patent protection provided by the patents and 60 patent applications we hold or pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. We have obtained orphan drug designation for one of our product candidates and while we may seek orphan drug 82 designation for our other product candidates, we may never receive such designations.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. We have obtained orphan drug designation for one of our product candidates and while we may seek orphan drug designation for our other product candidates, we may never receive such designations.
We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, 85 regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition.
We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition.
We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions at which such trials are being conducted, by the Data Safety Monitoring Board, or DSMB, for such trial or by the FDA or other regulatory 48 authorities.
We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions at which such trials are being conducted, by the Data Safety Monitoring Board, or DSMB, for such trial or by the FDA or other regulatory authorities.
Our commercial revenues, if any, will be derived from sales of products that we do not expect to be 65 commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and 68 expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
Outside parties may: • have staffing difficulties; • fail to comply with contractual obligations; • experience regulatory compliance issues; • undergo changes in priorities or become financially distressed; or • form relationships with other entities, some of which may be our competitors.
Outside parties may: • have staffing difficulties; • fail to comply with contractual obligations; • experience regulatory compliance issues; • undergo changes in priorities or become financially distressed; or 48 • form relationships with other entities, some of which may be our competitors.
Likewise, similar events relating to the information technology systems of our third-party collaborators who we rely on for the manufacture of our product candidates and to conduct clinical trials could also have a material adverse effect on our business.
Likewise, similar events relating to the information technology systems of our 77 third-party collaborators who we rely on for the manufacture of our product candidates and to conduct clinical trials could also have a material adverse effect on our business.
A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical development testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.
A failure of one or more clinical trials can occur at any stage of testing. The outcome of 39 preclinical development testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.
We 70 may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements, however, despite the existence generally of confidentiality agreements and other contractual restrictions.
We may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements, however, despite the existence generally of confidentiality agreements and other contractual restrictions.
These stockholders may have interests, with respect to their common stock, that are different from those of our public market investors and the concentration of voting power among these stockholders may have an adverse effect 92 on the price of our common stock.
These stockholders may have interests, with respect to their common stock, that are different from those of our public market investors and the concentration of voting power among these stockholders may have an adverse effect on the price of our common stock.
The GDPR focuses on accountability of data controllers (such as us) and requires us to put in place all technical and organizational measures (privacy by design and by default) to ensure that we meet our obligations.
The GDPR focuses on accountability of data controllers (such as us) and requires us to put in place all technical and organizational measures (privacy by 67 design and by default) to ensure that we meet our obligations.
We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of pharmaceutical and clinical development, regulatory affairs and, if any of our product candidates receives marketing approval, sales, marketing and distribution.
In the future, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of pharmaceutical and clinical development, regulatory affairs and, if any of our product candidates receives marketing approval, sales, marketing and distribution.
We face competition with respect to our current product candidates, and will face competition with respect to any product candidates that 54 we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.
We face competition with respect to our current product candidates, and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.
We are generally also subject to all of the same risks with respect to protection of intellectual property that we co-own, as we are for intellectual property that we own. See “ – Risks Related to Our Intellectual Property – Risks Related to Protecting our Intellectual Property.” If we or D. E.
We are generally also subject to all of the same risks with respect to protection of intellectual property that we co-own, as we are for intellectual property that we own. See " – Risks Related to Our Intellectual Property – Risks Related to Protecting our Intellectual Property ." If we or D. E.
For some of our product candidates, we may decide to collaborate with additional pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. 61 We face significant competition in seeking appropriate collaborators.
For some of our product candidates, we may decide to collaborate with additional pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. We face significant competition in seeking appropriate collaborators.
In addition, if we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations. Risks Related to Raising Additional Capital We will need to raise substantial additional funding.
In addition, if we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations. 55 Risks Related to Raising Additional Capital We will need to raise substantial additional funding.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in 90 connection with our storage or disposal of biological, hazardous or radioactive materials.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
Before we can commercialize any of our product candidates, we must obtain marketing 52 approval. Currently, all of our product candidates are in development, and we have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction.
Before we can commercialize any of our product candidates, we must obtain marketing approval. Currently, all of our product candidates are in development, and we have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction.
Under the DESRES Agreement, D. E. Shaw Research controls the rights to its technology, we control the rights to certain compounds, and we jointly own with D. E. Shaw Research any other work product created by D. E. Shaw Research and us. Any 56 work product we jointly own with D. E.
Under the DESRES Agreement, D. E. Shaw Research controls the rights to its technology, we control the rights to certain compounds, and we jointly own with D. E. Shaw Research any other work product created by D. E. Shaw Research and us. Any work product we jointly own with D. E.
Under Section 382 of the Internal Revenue Code of 1986, as amended, or the IRC, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in the ownership of its equity over a three year period), the corporation’s ability to use its pre-change net operating loss carryforwards and certain other pre-change tax attributes to offset its post-change income may be limited.
Under Section 382 of the Internal Revenue Code of 1986, as amended, or the IRC, if a corporation undergoes an "ownership change" (generally defined as a greater than 50% change (by value) in the ownership of its equity over a three year period), the corporation’s ability to use its pre-change net operating loss carryforwards and certain other pre-change tax attributes to offset its post-change income may be limited.
Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.
Healthcare providers, physicians and 70 third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.
Compliance with applicable environmental, health and safety laws and regulations is expensive, and current or future environmental regulations may impair our business, prospects, financial condition or results of operations.
Compliance with applicable 78 environmental, health and safety laws and regulations is expensive, and current or future environmental regulations may impair our business, prospects, financial condition or results of operations.
Due to the size and complexity and the increasing amounts of confidential information that are maintained, our internal information technology systems and those of our third-party CROs, vendors and other contractors and consultants are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and electrical failures, as well as security incidents or breaches from inadvertent or intentional actions by our employees and/or third parties with whom we do business, or from cyber-attacks by malicious third 89 parties (including the deployment of harmful malware, ransomware, digital extortion, denial-of-service attacks, supply chain attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information), which may compromise our system infrastructure or those of our partners or lead to data leakage.
Due to the size and complexity and the increasing amounts of confidential information that are maintained, our internal information technology systems and infrastructure and those of our third-party CROs, vendors and other contractors and consultants are potentially vulnerable to breakdown or other damage, service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and electrical failures, as well as cyber-attacks or security compromises, incidents, or breaches from inadvertent or intentional actions by our employees, third-party CROs, vendors, contractors, consultants and/or third parties with whom we do business, or from cyber-attacks or security compromises, incidents, or breaches by malicious third parties (including the deployment of harmful malware, ransomware, digital extortion, denial-of-service attacks, supply chain attacks, social engineering and business email compromises, and other means to affect service reliability and threaten the confidentiality, integrity, availability, and security of systems, infrastructure or information), which may compromise our systems and infrastructure or those of our partners, third-party CROs, vendors, contractors, consultants and/or third parties with whom we do business, or lead to data leakage or compromise.
CMS 55 decides whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.
CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.
The market price for our common stock may be influenced by many factors, including: • the success of competitive products or technologies; • results of clinical trials of our product candidates or those of our competitors; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; 91 • the recruitment or departure of key personnel; • the level of expenses related to any of our product candidates or clinical development programs; • the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
The market price for our common stock may be influenced by many factors, including: • the success of competitive products or technologies; • results of clinical trials of our product candidates or those of our competitors; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our product candidates or clinical development programs; 79 • the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, industry and market conditions; and • the other factors described in this "Risk Factors" section.
For example, we have engaged Foundation Medicine, Inc. to develop its FoundationOne®CDx as a companion diagnostic for RLY-4008. The FDA has indicated that if we continue RLY-4008 and RLY-2608 in a specific biomarker-defined population, a companion diagnostic device will be required to ensure their safe and effective use.
For example, we have engaged Foundation Medicine, Inc. to develop its FoundationOne®CDx as a companion diagnostic for lirafugratinib. The FDA has indicated that if we continue RLY-2608 and lirafugratinib in a specific biomarker-defined population, a companion diagnostic device will be required to ensure their safe and effective use.
The UK GDPR and the UK Data Protection Act 2018, or collectively, UK GDPR, set out the UK’s data protection regime, which is independent from but aligned to the EU’s data protection regime. Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.
The UK GDPR and the UK Data Protection Act 2018, or collectively, UK GDPR, set out the UK’s data protection regime, which is independent from but currently still aligned to the EU’s data protection regime. Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.
EEA Member States have adopted implementing national laws to implement the GDPR which may partially deviate from the GDPR and the competent authorities in the EEA Member States may interpret GDPR obligations slightly differently from 77 country to country, so that we do not expect to operate in a uniform legal landscape in the EU.
EEA Member States have adopted implementing national laws to implement the GDPR which may partially deviate from the GDPR, and the competent authorities in the EEA Member States may interpret GDPR obligations slightly differently from country to country, so we do not expect to operate in a uniform legal landscape in the EU.
After any work product is assigned to us, we will have the right to prepare, file, prosecute and maintain patents that cover such assigned work product. We also have the implicit right to defend patents that cover work product owned by us. To date, much of the work product created under our agreement with D. E.
After any work product is assigned to us, we will have the right to prepare, file, prosecute and maintain patents that cover such assigned work product. We also have the implicit right to defend patents that cover work product owned by us. To date, some of the work product created under our agreement with D. E.
Shaw Research, including the Anton 2 supercomputer, are important aspects of our Dynamo platform, and we do not currently have access to another source of computational power comparable to that provided by the Anton 2 supercomputer. Currently, not only is our collaboration with D. E.
Shaw Research, including the Anton 2 supercomputer, are useful aspects of our Dynamo platform, and we do not currently have access to another source of computational power comparable to that provided by the Anton 2 supercomputer. Currently, not only is our collaboration with D. E.
This could result in an adverse reaction in the financial markets 93 due to a loss of confidence in the reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
This could result in an adverse reaction in the financial markets due to a loss of confidence in the 81 reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed, the further development and commercialization of our product candidates or any future product candidates could be hindered or delayed, we could be required to expend significant amounts of money and other resources to repair or replace our information systems or networks, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
To the extent that any disruption or security compromises, incident, or breach were to result in a loss of, or damage to, our systems, infrastructure, data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed, the further development and commercialization of our product candidates or any future product candidates could be hindered or delayed, we could be required to expend significant amounts of money and other resources to repair, remediate, or replace our information systems or networks, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
The FDA has indicated that if we continue RLY-4008 and RLY-2608 in a specific biomarker-defined population, a companion diagnostic device will be required to ensure their safe and effective use.
The FDA has indicated that if we continue RLY-2608 and lirafugratinib in a specific biomarker-defined population, a companion diagnostic device will be required to ensure their safe and effective use.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to 94 elect directors of your choosing or cause us to take other corporate actions you desire.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to 82 elect directors of your choosing or cause us to take other corporate actions you desire.
Although we have engaged Foundation Medicine, Inc. to develop its FoundationOne®CDx as a companion diagnostic for RLY-4008, if any of our current or future third-party companion diagnostic partners is unable or unwilling to obtain or maintain regulatory approval for a companion diagnostic for any of our product candidates, regulatory approval for such product candidates, if obtained at all, may be delayed.
Although we have engaged Foundation Medicine, Inc. to develop its FoundationOne®CDx as a companion diagnostic for lirafugratinib, if any of our current or future third-party companion diagnostic partners is unable or unwilling to obtain or maintain regulatory approval for a companion diagnostic for any of our product candidates, regulatory approval for such product candidates, if obtained at all, may be delayed.
You should carefully consider the risks described below, as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock.
You should carefully consider the risks described below, as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," before deciding whether to invest in our common stock.
Given the vast number of patents in our field of technology, we cannot be certain that we do not infringe existing patents or that we will not infringe patents that may be granted in the future. Many companies have filed, and continue to file, patent applications related to SHP2 inhibitors, FGFR2 inhibitors, PI3K inhibitors, CDK2 inhibitors and ERα degraders.
Given the vast number of patents in our field of technology, we cannot be certain that we do not infringe existing patents or that we will not infringe patents that may be granted in the future. Many companies have filed, and continue to file, patent applications related to SHP2 inhibitors, FGFR2 inhibitors and PI3K inhibitors.
On September 25, 2020, CMS stated drugs imported by states under this rule will not be eligible for federal rebates under Section 1927 of the Social Security Act and manufacturers would not report these drugs for “best price” or Average Manufacturer Price purposes.
On September 25, 2020, CMS stated drugs imported by States under this rule will not be eligible for federal rebates under Section 1927 of the Social Security Act and manufacturers would not report these drugs for "best price" or Average Manufacturer Price purposes.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the frequency, persistence, intensity and sophistication of attempted attacks and intrusions from around the world have increased, including potentially in connection with the current conflict between Russia and Ukraine.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, insider threats, foreign governments, and cyber terrorists, has generally increased as the frequency, persistence, intensity and sophistication of attempted attacks and intrusions from around the world have increased, including potentially in connection with the ongoing conflict between Russia and Ukraine.
Genentech has the first right, but not the obligation, to file, prosecute and maintain any patents licensed to it, as well as to enforce infringement of or defend claims against such patents that relate to GDC-1971 or other SHP2 inhibitors.
Genentech has the first right, but not the obligation, to file, prosecute and maintain any patents licensed to it, as well as to enforce infringement of or defend claims against such patents that relate to migoprotafib or other SHP2 inhibitors.
In January 2022, the FDA granted orphan drug designation to RLY-4008 for the treatment of cholangiocarcinoma. As part of our business strategy, we may seek orphan drug designation for certain of our other product candidates as well, and we may be unsuccessful.
In January 2022, the FDA granted orphan drug designation to lirafugratinib for the treatment of cholangiocarcinoma. As part of our business strategy, we may seek orphan drug designation for certain of our other product candidates as well, and we may be unsuccessful.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference. 97 Unregistered Sales of Equity Securities and Use of Proceeds None.
Biggest changeThe stock price performance included in this graph is not necessarily indicative of, nor is it intended to forecast, future stock price performance. 85 Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Certain Information Regarding the Trading of Our Common Stock Our common stock trades under the symbol “RLAY” on the NASDAQ Global Market and has been publicly traded since July 16, 2020.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Certain Information Regarding the Trading of Our Common Stock Our common stock trades under the symbol "RLAY" on the Nasdaq Global Market and has been publicly traded since July 16, 2020.
The following performance graph compares the performance of our common stock to the Nasdaq Composite Index and to the Nasdaq Biotechnology Index from July 16, 2020, the closing market price on the first trading day of our common stock, through December 31, 2022.
The following performance graph compares the performance of our common stock to the Nasdaq Composite Index and to the Nasdaq Biotechnology Index from July 16, 2020, the closing market price on the first trading day of our common stock, through December 31, 2023.
Recent Sales of Unregistered Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any of our registered equity securities during the period covered by this Annual Report on Form 10-K. Item 6. [Reserved] Not applicable. 98
Unregistered Sales of Equity Securities and Use of Proceeds None. Recent Sales of Unregistered Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any of our registered equity securities during the period covered by this Annual Report on Form 10-K. Item 6. [Reserved] Not applicable. 86
Stock Performance Graph The following performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, or SEC, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Exchange Act or Securities Act of 1933, as amended, or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
Stock Performance Graph The following performance graph and related information shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, or SEC, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Exchange Act or Securities Act of 1933, as amended, or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
Prior to this time, there was no public market for our common stock. Holders of Our Common Stock As of February 1, 2023, there were approximately 50 holders of record of shares of our common stock. This number does not include stockholders for whom shares are held in “nominee” or “street” name.
Prior to this time, there was no public market for our common stock. Holders of Our Common Stock As of February 1, 2024, there were approximately 47 holders of record of shares of our common stock. This number does not include stockholders for whom shares are held in "nominee" or "street" name.
The comparison assumes $100 was invested in our common stock and in each of the foregoing indices after the market closed on July 16, 2020 and it assumes reinvestment of dividends, if any. The stock price performance included in this graph is not necessarily indicative of, nor is it intended to forecast, future stock price performance.
The comparison assumes $100 was invested in our common stock and in each of the foregoing indices after the market closed on July 16, 2020 and it assumes reinvestment of dividends, if any.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2022 2021 2020 (in thousands) Cash used in operating activities $ (229,490 ) $ (74,406 ) $ (102,489 ) Cash (used in) provided by investing activities (188,745 ) (479,511 ) 81,672 Cash provided by financing activities 289,910 388,090 426,509 Net (decrease) increase in cash, cash equivalents, and restricted cash $ (128,325 ) $ (165,827 ) $ 405,692 Operating Activities During the year ended December 31, 2022, we used $229.5 million of cash on operating activities, primarily resulting from our net loss of $290.5 million, offset by non-cash charges of $49.8 million and cash provided by changes in our operating assets and liabilities of $11.2 million.
Biggest changeThe aggregate gross proceeds for the Private Placement were approximately $30.0 million, before deducting offering expenses payable by us in 2024. 95 Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2023 2022 2021 (in thousands) Cash used in operating activities $ (300,316 ) $ (229,490 ) $ (74,406 ) Cash provided by (used in) investing activities 257,634 (188,745 ) (479,511 ) Cash provided by financing activities 34,753 289,910 388,090 Net decrease in cash, cash equivalents, and restricted cash $ (7,929 ) $ (128,325 ) $ (165,827 ) Operating Activities During the year ended December 31, 2023, we used $300.3 million of cash on operating activities, primarily resulting from our net loss of $342.0 million and cash used to fund changes in our operating assets and liabilities of $32.5 million, offset by non-cash charges of $74.1 million.
We expect that our general and administrative expenses will increase in the future, as we increase our general and administrative personnel headcount to support personnel in research and development and to support our operations, generally, as we increase our research and development activities and activities related to the potential commercialization of our product candidates.
We expect that our general and administrative expenses will increase in the future, as we increase our general and administrative personnel headcount to support personnel in research and development and to support our operations, generally, and as we increase our research and development activities and activities related to the potential commercialization of our product candidates.
During the year ended December 31, 2021, we used $74.4 million on operating activities, primarily resulting from our net loss of $363.9 million, offset by non-cash charges of $192.1 million and cash provided by changes in our operating assets and liabilities of $97.3 million.
During the year ended December 31, 2021, we used $74.4 million of cash on operating activities, primarily resulting from our net loss of $363.9 million, offset by non-cash charges of $192.1 million and cash provided by changes in our operating assets and liabilities of $97.3 million.
Investing Activities During the year ended December 31, 2022, we used $188.7 million of cash on investing activities, consisting of $179.7 million of net purchases of investments and $9.1 million for the acquisition of property and equipment.
During the year ended December 31, 2022, we used $188.7 million of cash on investing activities, consisting of $179.7 million of net purchases of investments and $9.1 million for the acquisition of property and equipment.
Operating Expenses Research and Development Expenses Research and development expenses include: • salaries, benefits, and other employee related costs, including stock-based compensation expense, for personnel engaged in research and development functions; • costs of outside consultants, including their fees, stock-based compensation, and related travel expenses; • expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, and other vendors that conduct our clinical trials and preclinical activities; • costs of acquiring, developing, and manufacturing clinical trial materials and lab supplies; • costs related to compliance with regulatory requirements; and • facility costs, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.
Operating Expenses Research and Development Expenses Research and development expenses include: • salaries, benefits, and other employee related costs, including stock compensation expense, for personnel engaged in research and development functions; • costs of outside consultants, including their fees, stock compensation, and related travel expenses; • expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, and other vendors that conduct our clinical trials and preclinical activities; • costs of acquiring, developing, and manufacturing clinical trial materials and lab supplies; • costs related to compliance with regulatory requirements; and • facility costs, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.
To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses. Recently Issued and Adopted Accounting Pronouncements A description of recently issued accounting pronouncements that we have adopted is disclosed in Note 2, Significant Accounting Policies , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses. 100 Recently Issued and Adopted Accounting Pronouncements A description of recently issued accounting pronouncements that we have adopted is disclosed in Note 2, Significant Accounting Policies , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We do not expect to record incremental expenses in connection therewith in future periods. Loss on Initial Consolidation of Variable Interest Entity Loss on initial consolidation of variable interest entity consists of the difference between total consideration transferred and the fair value of net assets acquired and liabilities assumed in connection with our acquisition of ZebiAI.
We do not expect to record incremental expenses in connection therewith in future periods. 91 Loss on Initial Consolidation of Variable Interest Entity Loss on initial consolidation of variable interest entity consists of the difference between total consideration transferred and the fair value of net assets acquired and liabilities assumed in connection with our acquisition of ZebiAI.
The financial terms of such agreements are subject to negotiation and vary from contract to contract, which may result 112 in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.
The financial terms of such agreements are subject to negotiation and vary from contract to contract, which may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.
General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate, and business development and administrative functions.
General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock compensation, for personnel in our executive, finance, corporate, and business development and administrative functions.
We 110 provided a letter of credit in connection with our facility lease agreement in the amount of $0.9 million with a financial institution, which expires commensurate with the lease in April 2029. 60 Hampshire Street In May 2021, the Company entered into an agreement to lease approximately 41,474 square feet of office and laboratory space at 60 Hampshire Street, Cambridge, Massachusetts 02139.
We 98 provided a letter of credit in connection with our facility lease agreement in the amount of $0.9 million with a financial institution, which expires commensurate with the lease in April 2029. 60 Hampshire Street In May 2021, the Company entered into an agreement to lease approximately 41,474 square feet of office and laboratory space at 60 Hampshire Street, Cambridge, Massachusetts 02139.
We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies, and testing, manufacturing, and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and are cancelable by us upon prior notice of 30 days.
Other Significant Arrangements We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies, and testing, manufacturing, and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and are cancelable by us upon prior notice of 30 days.
We do not believe that such factors had a material adverse impact on our results of operations during the years ended December 31, 2022, 2021, and 2020. Since our inception, we have incurred significant operating losses on an aggregate basis.
We do not believe that such factors had a material adverse impact on our results of operations during the years ended December 31, 2023, 2022, and 2021. Since our inception, we have incurred significant operating losses on an aggregate basis.
We gained control of the space in January 2019 and the lease expires in April 2029, subject to certain renewal options, which have not been included in the measurement of our right of use asset and lease liability on the balance sheet through December 31, 2022.
We gained control of the space in January 2019 and the lease expires in April 2029, subject to certain renewal options, which have not been included in the measurement of our right of use asset and lease liability on the balance sheet through December 31, 2023.
The amendment commenced in October 2020 and also expires in April 2029, subject to certain renewal options, which have also not been included in the measurement of our right of use asset and lease liability on the balance sheet through December 31, 2022.
The amendment commenced in October 2020 and also expires in April 2029, subject to certain renewal options, which have also not been included in the measurement of our right of use asset and lease liability on the balance sheet through December 31, 2023.
We gained control of the space in July 2022 and the lease expires in June 2032. There are no renewal options. We provided a letter of credit in connection with the agreement in the amount of $1.7 million with a financial institution, which expires commensurate with the lease in June 2032.
We gained control of the space in July 2022 and the lease expires in June 2032. There are no renewal options. We provided a letter of credit in connection with the agreement in the amount of $1.8 million with a financial institution, which expires commensurate with the lease in June 2032.
Shaw Research royalty payments, as defined in the DESRES Agreement. We assessed the milestone and royalty events under the DESRES Agreement as of December 31, 2022 and 2021, concluding no such payments were due as of the balance sheet dates.
Shaw Research royalty payments, as defined in the DESRES Agreement. We assessed the milestone and royalty events under the DESRES Agreement as of December 31, 2023 and 2022, concluding no such payments were due as of the balance sheet dates.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
As a result of many factors, including those factors set forth in the "Risk Factors" section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
As of December 31, 2022, we had an accumulated deficit of $1.1 billion. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment, and general and administrative costs associated with our operations.
As of December 31, 2023, we had an accumulated deficit of $1.4 billion. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment, and general and administrative costs associated with our operations.
In August 2021, we entered into a sales agreement, or Sales Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $300.0 million from time to time in “at-the-market” offerings through Cowen, as our sales agent.
In August 2021, we entered into a sales agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $300.0 million from time to time in "at-the-market" offerings through Cowen, as our sales agent, or At-the-Market Offerings.
The increase of $8.6 million was primarily due to $9.2 million of additional employee related costs from increased headcount, including an increase in stock-based compensation expense of $1.9 million, offset by individually insignificant fluctuations in other general and administrative expenses.
The increase of $8.6 million was primarily due to $9.2 million of additional employee costs from increased headcount in our general and administrative functions, including an increase of $1.9 million in stock compensation expense, offset by individually insignificant fluctuations in other general and administrative expenses.
Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net losses were $290.5 million, $363.9 million, and $52.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.
Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net losses were $342.0 million, $290.5 million, and $363.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.
We expect that our research and development expenses will continue to increase for the foreseeable future as we continue to conduct clinical trials of RLY-4008 and RLY-2608, as well as identify and develop additional product candidates.
We expect that our research and development expenses will continue to increase for the foreseeable future as we continue to conduct clinical trials of our lead product candidates, as well as identify and develop additional product candidates.
The duration, costs, and timing of clinical trials and development of our product candidates will depend on a variety of factors, including: • the scope, rate of progress, expense, and results of our preclinical development activities, any future clinical trials of RLY-4008, RLY-2608, or other product candidates and other research and development activities that we may conduct; • uncertainties in clinical trial design and patient enrollment or drop out or discontinuation rates; • establishing an appropriate safety and efficacy profile with IND-enabling studies; • the initiation and completion of future clinical trial results; • the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators; • significant and changing government regulation and regulatory guidance; • potential additional studies requested by regulatory agencies; • establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully; • the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors resulting from the ongoing COVID-19 pandemic or a similar public health crisis or the changing political conditions, such as the current conflict between Russia and Ukraine and related global economic sanctions; • the expense of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; and • maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates.
The duration, costs, and timing of clinical trials and development of our product candidates will depend on a variety of factors, including: • the scope, rate of progress, expense, and results of our preclinical development activities, any future clinical trials of our lead product candidates, or other product candidates and other research and development activities that we may conduct; • uncertainties in clinical trial design and patient enrollment or drop out or discontinuation rates; • establishing an appropriate safety and efficacy profile with IND-enabling studies; • the initiation and completion of future clinical trial results; • the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators; • significant and changing government regulation and regulatory guidance; • potential additional studies requested by regulatory agencies; • establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully; • the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors resulting from any public health crisis or ongoing geopolitical conflicts and related global economic sanctions; • the expense of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; and • maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates.
Other Income, Net Other income, net, was $8.8 million for the year ended December 31, 2022 compared to $0.8 million for the year ended December 31, 2021. The increase of approximately $8.0 million was primarily a result of changes in interest rates.
Other Income (Expense), Net Other income, net, was $8.8 million for the year ended December 31, 2022 compared to $0.8 million for the year ended December 31, 2021. The increase of $7.9 million was primarily a result of changes in interest rates.
We believe that our existing cash, cash equivalents, and investments will enable us to fund our operating expenses and capital expenditure requirements into 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
We believe that our existing cash, cash equivalents, and investments will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Our future capital requirements will depend on many factors, including: • the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors, resulting from the ongoing COVID-19 pandemic or similar public health crisis or the changing political conditions, such as the current conflict between Russia and Ukraine and related global economic sanctions; • the scope, progress, results, and costs of our current and future clinical trials of RLY-4008 and RLY-2608 and additional preclinical research of our other programs; • the scope, progress, results, and costs of drug discovery, preclinical research, and clinical trials for our other product candidates; • the number of future product candidates that we pursue and their development requirements; • the costs, timing, and outcome of regulatory review of our product candidates; • our ability to establish and maintain collaborations on favorable terms, if at all; • the success of any existing or future collaborations that we may enter into with third parties; • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, such as the Genentech Agreement; • the achievement of milestones or occurrence of other developments that trigger payments under any existing or future collaboration agreements, if any; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under any existing or future collaboration agreements, if any; • the costs and timing of future commercialization activities, including drug sales, marketing, manufacturing, and distribution, for any of our product candidates for which we receive marketing approval, to the extent that such sales, marketing, manufacturing, and distribution are not the responsibility of any collaborator that we may have at such time; • the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval; • the costs of preparing, filing, and prosecuting patent applications, maintaining, and enforcing our intellectual property rights and defending intellectual property-related claims; 109 • our headcount growth and associated costs as we expand our business operations and our research and development activities; and • the costs of operating as a public company.
Our future capital requirements will depend on many factors, including: • the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors, resulting from public health epidemics or outbreaks of infectious disease or ongoing geopolitical conflicts and related global economic sanctions; • the scope, progress, results, and costs of our current and future clinical trials of our lead product candidates and additional preclinical research of our other programs; • the scope, progress, results, and costs of drug discovery, preclinical research, and clinical trials for our other product candidates; • the number of future product candidates that we pursue and their development requirements; • the costs, timing, and outcome of regulatory review of our product candidates; • our ability to establish and maintain collaborations on favorable terms, if at all; • the success of any existing or future collaborations that we may enter into with third parties; • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, such as the Genentech Agreement; • the achievement of milestones or occurrence of other developments that trigger payments under any existing or future collaboration agreements, if any; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under any existing or future collaboration agreements, if any; • the costs and timing of future commercialization activities, including drug sales, marketing, manufacturing, and distribution, for any of our product candidates for which we receive marketing approval, to the extent that such sales, marketing, manufacturing, and distribution are not the responsibility of any collaborator that we may have at such time; • the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval; • the costs of preparing, filing, and prosecuting patent applications, maintaining, and enforcing our intellectual property rights and defending intellectual property-related claims; 97 • our headcount growth and associated costs as we expand our business operations and our research and development activities; and • the costs of operating as a public company.
Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid expenses or accrued research and development expenses. 102 Our lead product candidates, RLY-4008, RLY-2608 and GDC-1971, are in clinical development.
Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid expenses or accrued research and development expenses. Our lead product candidates are in clinical development.
To date, we have principally financed our operations through private placements of preferred stock, convertible debt, and proceeds from public offerings of our common stock. We have also received an aggregate of $105.0 million in connection with the Genentech Agreement through December 31, 2022.
To date, we have principally financed our operations through private placements of preferred stock and common stock, convertible debt, and proceeds from public offerings of our common stock. We have also received an aggregate of $111.8 million in connection with the Genentech Agreement through December 31, 2023.
Because of the numerous risks and uncertainties associated with the development of RLY-4008, RLY-2608, and our other product candidates and programs, and because the extent to which we may enter into collaborations with third parties for the development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.
Because of the numerous risks and uncertainties associated with the development of our product candidates, as well as our preclinical programs, and because the extent to which we may enter into collaborations with third parties for the development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.
As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties.
Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties.
We anticipate that our expenses will increase substantially if and as we: • conduct our current and future clinical trials of RLY-4008 and RLY-2608; • conduct additional preclinical research and development of RLY-5836, our PI3Kα mutant selective inhibitor, CDK2 inhibitor and ERα degrader programs and other early-stage programs; • initiate and continue research and preclinical and clinical development of our other product candidates; • seek to identify additional product candidates; • pursue marketing approvals for any of our product candidates that successfully complete clinical trials, if any; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; • require the manufacture of larger quantities of our product candidates for clinical development and potentially commercialization; • obtain, maintain, expand and protect our intellectual property portfolio; • acquire or in-license other drugs and technologies; • hire and retain additional clinical, regulatory, quality and scientific personnel; • build out new facilities or expand existing facilities to support our ongoing development activity; and • add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and our operations as a public company. 101 In addition, if we obtain marketing approval for any of our lead product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
We anticipate that our expenses will increase substantially if and as we: • conduct our current and future clinical trials of our lead product candidates; • conduct additional preclinical research and development of our early-stage programs; • initiate and continue research and preclinical and clinical development of our other product candidates; • seek to identify additional product candidates; • pursue marketing approvals for any of our product candidates that successfully complete clinical trials, if any; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; • require the manufacture of larger quantities of our product candidates for clinical development and potentially commercialization; • obtain, maintain, expand and protect our intellectual property portfolio; • acquire or in-license other drugs and technologies; • hire and retain additional clinical, regulatory, quality and scientific personnel; • build out new facilities or expand existing facilities to support our ongoing development activity; and • add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and our operations as a public company.
The decrease of $1.6 million was primarily related to (a) the decrease in research and development services provided under the Genentech Agreement, as we completed enrollment of the Phase 1a clinical trial of GDC-1971 (formerly known as RLY-1971) in 2022 and are nearing completion of trial-related activities, and (b) revenue recognized upon the transfer of active pharmaceutical ingredient during the year ended December 31, 2021, for which no revenue was recognized during the year ended December 31, 2022.
The decrease of $1.6 million was primarily related to (a) the decrease in research and development services provided under the Genentech Agreement, as we completed enrollment of the Phase 1 clinical trial of migoprotafib in 2022 and were nearing completion of trial activities as of December 31, 2022, and (b) revenue recognized upon the transfer of active pharmaceutical ingredient during the year ended December 31, 2021, for which no revenue was recognized during the year ended December 31, 2022.
As of December 31, 2022, we also had Federal and state research and development tax credit carryforwards of $25.9 million and $5.6 million, respectively, which begin to expire in 2035 and 2030, respectively. 104 Results of Operations Comparison of years ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, Change 2022 2021 (in thousands) License and other revenue $ 1,381 $ 3,029 $ (1,648 ) Operating expenses: Research and development expenses $ 246,355 $ 172,650 $ 73,705 In-process research and development expenses — 123,000 (123,000 ) Loss on initial consolidation of variable interest entity — 11,855 (11,855 ) Change in fair value of contingent consideration liability (11,677 ) 2,836 (14,513 ) General and administrative expenses 65,978 57,386 8,592 Total operating expenses 300,656 367,727 (67,071 ) Loss from operations (299,275 ) (364,698 ) 65,423 Other income, net 8,766 826 7,940 Net loss $ (290,509 ) $ (363,872 ) $ 73,363 License and Other Revenue We recognized license and other revenue of approximately $1.4 million and $3.0 million for the years ended December 31, 2022 and 2021, respectively.
Comparison of years ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, Change 2022 2021 (in thousands) License and other revenue $ 1,381 $ 3,029 $ (1,648 ) Operating expenses: Research and development expenses $ 246,355 $ 172,650 $ 73,705 In-process research and development expenses — 123,000 (123,000 ) Loss on initial consolidation of variable interest entity — 11,855 (11,855 ) Change in fair value of contingent consideration liability (11,677 ) 2,836 (14,513 ) General and administrative expenses 65,978 57,386 8,592 Total operating expenses 300,656 367,727 (67,071 ) Loss from operations (299,275 ) (364,698 ) 65,423 Other income, net 8,766 826 7,940 Net loss $ (290,509 ) $ (363,872 ) $ 73,363 License and Other Revenue We recognized license and other revenue of approximately $1.4 million and $3.0 million for the years ended December 31, 2022 and 2021, respectively.
No such expenses were incurred during the year ended December 31, 2022. 105 Change in Fair Value of Contingent Consideration Liability The change in fair value of our contingent consideration liability for Contingent Milestone Payments under the Merger Agreement with ZebiAI was a decrease of $11.7 million for the year ended December 31, 2022 compared to an increase of $2.8 million for the year ended December 31, 2021.
Change in Fair Value of Contingent Consideration Liability The change in fair value of our contingent consideration liability for Contingent Milestone Payments under the Merger Agreement with ZebiAI was a decrease of $11.7 million for the year ended December 31, 2022 compared to an increase of $2.8 million for the year ended December 31, 2021.
Loss on Initial Consolidation of Variable Interest Entity Loss on initial consolidation of variable interest entity of $11.9 million was recognized for the year ended December 31, 2021 in connection with the acquisition of ZebiAI in the second quarter of 2021. No such expenses were incurred during the year ended December 31, 2020.
Loss on Initial Consolidation of Variable Interest Entity 94 Loss on initial consolidation of variable interest entity of $11.9 million was recognized during the year ended December 31, 2021 in connection with the acquisition of ZebiAI. No such expenses were incurred during the year ended December 31, 2022.
In addition, (i) the ZebiAI Holders are eligible to receive up to $85.0 million in other payments upon the achievement of certain platform or program milestones, payable in shares of our common stock, or the Contingent Milestone Payments, a portion of which was paid to the ZebiAI Holders in 2022, and (ii) we will pay 10% of payments we receive within three years of the closing date of the Merger Agreement from partnering, collaboration, or other agreements related to ZebiAI’s platform, up to an aggregate maximum amount of $100.0 million, payable in cash, or the Contingent Earnout Payments, to the ZebiAI Holders.
In addition, (i) the ZebiAI Holders are eligible to receive up to $85.0 million in payments upon the achievement of certain platform or program milestones, payable in shares of our common stock, or the Contingent Milestone Payments, a portion of which was paid to the ZebiAI Holders in 2022 and 2023, and (ii) we will pay 10% of payments we receive within three years of the closing date of the Merger Agreement from partnering, collaboration, or other agreements related to ZebiAI’s platform, up to an aggregate maximum amount of $100.0 million, payable in cash to the ZebiAI Holders. 88 In December 2020, we entered into the Genentech Agreement with Genentech for the development and commercialization of migoprotafib.
In December 2021, we dosed the first patient in the RLY-2608 ReDiscover Trial and in April 2022, we initiated the second arm of the dose escalation part of this trial, evaluating RLY-2608 in combination with fulvestrant for patients with HR+, HER2–, PI3Kα-mutated, locally advanced or metastatic breast cancer.
In April 2022, we initiated the second arm of the dose escalation part of this trial, evaluating RLY-2608 in combination with fulvestrant for patients with HR+, HER2–, PI3Kα-mutated, locally advanced or metastatic breast cancer.
In-Process Research and Development Expenses In-process research and development expenses of $123.0 million were recognized for the year ended December 31, 2021 in connection with the in-process research and development asset pursuant to the asset acquisition of ZebiAI in the second quarter of 2021. No such expenses were incurred during the year ended December 31, 2022.
In-Process Research and Development Expenses In-process research and development expenses of $123.0 million were recognized during the year ended December 31, 2021 in connection with the acquisition of ZebiAI. No such expenses were incurred during the year ended December 31, 2022.
As of December 31, 2022, we had Federal NOL carryforwards of $412.0 million available to reduce taxable income, of which $43.1 million expire beginning in 2035 and $368.9 million do not expire. As of December 31, 2022, we had state NOL carryforwards of $501.7 million available to reduce future state taxable income, which expire at various dates beginning in 2035.
As of December 31, 2023, we had Federal NOL carryforwards of $498.0 million available to reduce taxable income, of which $43.1 million expire beginning in 2035 and $454.9 million do not expire. As of December 31, 2023, we had state NOL carryforwards of $559.7 million available to reduce future state taxable income, which expire at various dates beginning in 2035.
Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as global supply chain disruptions, uncertain global economic conditions, global trade disputes or political instability as further discussed in the section “Risk Factors” in this Annual Report.
Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as public health crises, global supply chain disruptions, uncertain global economic conditions, global trade disputes or political instability as further discussed in the section "Risk Factors" in this Annual Report on Form 10-K.
In addition, we continue to incur additional costs associated with operating as a public company. We expect that our expenses will increase substantially as discussed in more detail in “ ¾ Overview” above. As of December 31, 2022, we had cash, cash equivalents, and investments of $998.9 million.
In addition, we continue to incur additional costs associated with operating as a public company. We expect that our expenses will increase substantially as discussed in more detail in " ¾ Overview" above. As of December 31, 2023, we had cash, cash equivalents, and investments of $750.1 million.
Significant judgment is used in determining these assumptions during each reporting period. Reasonable changes in these assumptions can cause material changes to the fair value of our contingent consideration liability. Revenue Recognition We account for revenue recognition in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , or ASC 606.
Reasonable changes in these assumptions can cause material changes to the fair value of our contingent consideration liability. Revenue Recognition We account for revenue recognition in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , or ASC 606.
We believe our cash, cash equivalents, and investments of $998.9 million as of December 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements into 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
We believe our cash, cash equivalents, and investments of $750.1 million as of December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Financing Activities During the year ended December 31, 2022, net cash provided by financing activities was $289.9 million, primarily consisting of $284.7 million in net proceeds from the September 2022 Offering, as well as $3.5 million in proceeds from the exercise of stock options and $1.7 million in purchases under our Employee Stock Purchase Plan, or ESPP.
During the year ended December 31, 2022, net cash provided by financing activities was $289.9 million, primarily consisting of $284.7 million in net proceeds from the September 2022 Offering, as well as $5.2 million in proceeds from stock option exercises and purchases under our ESPP.
Changes in the fair value of the Contingent Milestone Payments can result from changes to one or multiple inputs, including adjustments to the probability of achievement, 111 timing of the payments, and, to a lesser extent, changes to the discount rate used to measure the payments at present value.
Changes in the fair value of the Contingent Milestone Payments can result from changes to one or multiple inputs, including adjustments to the probability of achievement, timing of the payments, and, to a lesser extent, changes to the discount rate used to measure the payments at present value. Significant judgment is used in determining these assumptions during each reporting period.
We believe this approach will increase the likelihood of successfully translating a specific pharmacological mechanism into clinical benefit. We are advancing a pipeline of medicines to address targets in precision oncology and genetic disease indications, including our lead product candidates, RLY-4008, RLY-2608, and GDC-1971 (formerly known as RLY-1971). • RLY-4008.
We believe this approach will increase the likelihood of successfully translating a specific pharmacological mechanism into clinical benefit. We are advancing a pipeline of medicine candidates to address targets in precision oncology and genetic disease, including our lead product candidates described below. • RLY-2608. • ReDiscover Trial .
Prior to our initial public offering, we received gross proceeds of $520.0 million from sales of preferred stock and issuance of convertible debt. We received an upfront payment of $75.0 million from Genentech pursuant to the Genentech Agreement in January 2021, as well as $30.0 million in milestone payments through December 31, 2022.
Prior to our initial public offering, we received gross proceeds of $520.0 million from sales of preferred stock and issuance of convertible debt. We received an upfront payment of $75.0 million from Genentech pursuant to the Genentech Agreement in January 2021, as well as $45.0 million in milestone payments as of the date of this Annual Report on Form 10-K.
We also have five additional discovery stage programs across both precision oncology and genetic disease indications. We are focused on using the novel insights derived from our approach to transform the lives of patients suffering from debilitating and life-threatening diseases through the discovery, development and commercialization of our therapies. We were incorporated in May 2015.
We are focused on using the novel insights derived from our approach to transform the lives of patients suffering from debilitating and life-threatening diseases through the discovery, development and commercialization of our therapies. We were incorporated in May 2015.
For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development. 103 In-Process Research and Development Expenses In-process research and development expenses consist of the cost of acquiring in-process research and development assets that have no alternative future use, specifically in connection with our acquisition of ZebiAI.
For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
There have been no shares of our common stock sold under the Sales Agreement as of December 31, 2022. 107 In October 2021, we completed the October 2021 Offering of 15,188,679 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 1,981,132 shares, at an offering price of $26.50 per share.
In October 2021, we completed the October 2021 Offering of 15,188,679 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 1,981,132 shares, at an offering price of $26.50 per share.
During the year ended December 31, 2020, we used $102.5 million on operating activities, primarily resulting from our net loss of $52.4 million and cash used by changes in our operating assets and liabilities of $85.2 million, partially offset by non-cash charges of $35.1 million.
During the year ended December 31, 2022, we used $229.5 million of cash on operating activities, primarily resulting from our net loss of $290.5 million, offset by non-cash charges of $49.8 million and cash provided by changes in our operating assets and liabilities of $11.2 million.
Genentech initiated the cohort of GDC-1971 in combination with GDC-6036, its KRAS G12C 99 inhibitor, in a Phase 1b trial in July 2021, and a Phase 1b trial of GDC-1971 in combination with atezolizumab, its PD-L1 antibody, in August 2022.
Genentech initiated the cohort of migoprotafib in combination with GDC-6036, its KRAS G12C inhibitor, in a Phase 1b trial in July 2021.
In December 2020, we entered into the Genentech Agreement for the development and commercialization of RLY-1971 (now referred to as GDC-1971).
In December 2020, we entered into a global collaboration and license agreement with Genentech, Inc., a member of the Roche Group, or Genentech, for the development and commercialization of RLY-1971 (now referred to as migoprotafib, or GDC-1971), or the Genentech Agreement.
We recognize revenue pursuant to ASC 606 when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
We recognize revenue pursuant to ASC 606 when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. 99 At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within the contract and determine those that are performance obligations.
During the year ended December 31, 2020, net cash provided by financing activities was $426.5 million, primarily consisting of $425.3 million in proceeds from our initial public offering, as well as $1.2 million in proceeds from the exercise of stock options. 108 Funding Requirements We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to RLY-4008 and RLY-2608 and the ongoing preclinical development activities of our other programs.
During the year ended December 31, 2021, net cash provided by financing activities was $388.1 million, primarily consisting of $382.2 million in net proceeds from the October 2021 Offering, as well as $5.9 in proceeds from stock option exercises and purchases under our ESPP. 96 Funding Requirements We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our product candidates and the ongoing preclinical development activities of our other programs.
Employee related expenses include salary, wages, stock-based compensation, and other costs related to our personnel, which are not allocated to specific programs or activities.
Platform research and other research and development activities include costs that are not specifically allocated to active product candidates, including facilities costs, depreciation expense and other costs. Employee related expenses include salary, wages, stock compensation, and other costs related to our personnel, which are not allocated to specific programs or activities.
During the year ended December 31, 2020, net cash provided by investing activities was $81.7 million, consisting of $83.6 million from net investment proceeds upon maturity, offset by $1.9 million for the acquisition of property and equipment.
Investing Activities During the year ended December 31, 2023, net cash provided by investing activities was $257.6 million, consisting of $261.8 million in proceeds from net maturities of investments, offset by $4.1 million for the acquisition of property and equipment.
Change in Fair Value of Contingent Consideration Liability The change in fair value of our contingent consideration liability for Contingent Milestone Payments under the Merger Agreement with ZebiAI was an increase of $2.8 million for the year ended December 31, 2021, primarily attributable to time value of money.
Change in Fair Value of Contingent Consideration Liability The change in fair value of our contingent consideration liability for Contingent Milestone Payments under the Merger Agreement with ZebiAI was a decrease of $6.4 million for the year ended December 31, 2023 compared to a decrease of $11.7 million for the year ended December 31, 2022.
To date, we have principally financed our operations through private placements of preferred stock, convertible debt and proceeds from public offerings of our common stock.
We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for several years, if ever. To date, we have principally financed our operations through private placements of preferred stock and common stock, convertible debt and proceeds from public offerings of our common stock.
We received proceeds of $284.7 million, which was net of $15.3 million in underwriting discounts and commissions, as well as other offering expenses.
We received proceeds of $284.7 million, which was net of $15.3 million in underwriting discounts and commissions, as well as other offering expenses. In January 2024, we entered into a securities purchase agreement with Nextech Crossover I SCP for the Private Placement.
Additionally, inflation generally affects us by increasing our employee-related costs and clinical trial expenses, as well as other operating expenses.
We also retain the right to develop migoprotafib in combination with our FGFR2 and PI3Kα programs. Inflation generally affects us by increasing our employee-related costs and clinical trial expenses, as well as other operating expenses.
During the year ended December 31, 2021, net cash provided by financing activities was $388.1 million, primarily consisting of $382.2 million in net proceeds from the October 2021 Offering, as well as $4.7 million in proceeds from the exercise of stock options and $1.1 million in purchases under our ESPP.
Financing Activities During the year ended December 31, 2023, net cash provided by financing activities was $34.8 million, primarily consisting of $30.3 million in net proceeds from At-the-Market Offerings, as well as $4.5 million in proceeds from stock option exercises and purchases under our Employee Stock Purchase Plan, or ESPP.
While our initial focus is on precision oncology, we believe our Dynamo platform may also be broadly applied to other areas of precision medicine, such as genetic disease indications.
While our initial focus is on precision oncology, we believe our Dynamo platform may also be broadly applied to other areas of precision medicine, such as genetic diseases. In addition to the clinical stage product candidates described above, we have more than seven active discovery stage programs across both precision oncology and genetic diseases.
We are eligible to receive an additional $5.0 million in near-term payments; and, if we do not opt into a U.S. profit/cost share, up to $685.0 million in additional development, commercialization and sales-based milestones for GDC-1971; and tiered royalties on annual global net sales (on a country-by-country basis), anticipated to be in the low-to-mid-teens, subject to reductions in certain circumstances.
We are eligible to receive up to an aggregate of $675.0 million in additional payments upon the achievement of other specified development, commercialization, and sales-based milestones for migoprotafib worldwide, as well as tiered royalties ranging from low-to-mid teens on annual worldwide net sales of migoprotafib, on a country-by-country basis, subject to reduction in certain circumstances.
The increase of $73.7 million was due to $32.7 million of additional external costs in connection with the ongoing enrollment of our clinical trials for RLY-4008 and RLY-2608, $24.7 million of additional employee related costs from increased headcount, including an increase in stock-based compensation expense of $5.7 million, $10.8 million of additional external costs for platform technologies and preclinical programs, and $5.5 million of other expenses, primarily for facility expenses associated with additional lab space during the year ended December 31, 2022.
The increase of $73.7 million was primarily due to $32.7 million of additional external costs in connection with the clinical trials for our lead product candidates, as well as $24.7 million of additional employee costs from increased headcount in our research and development functions, including an increase in stock compensation expense of $5.7 million.
The fluctuation of $14.5 million was primarily attributable to changes in the assumptions underlying the fair value measurement between periods, which we expect to continue in future periods. General and Administrative Expenses General and administrative expenses were $66.0 million for the year ended December 31, 2022 compared to $57.4 million for the year ended December 31, 2021.
General and Administrative Expenses General and administrative expenses were $66.0 million for the year ended December 31, 2022 compared to $57.4 million for the year ended December 31, 2021.
Additionally, we are eligible to receive additional royalties in the event of regulatory approval of GDC-1971 and Genentech’s compound, GDC-6036, that directly binds to and inhibits KRAS G12C, in combination.
We are also eligible to receive additional royalties in the event of regulatory approval of migoprotafib and Genentech’s compound, GDC-6036, that directly binds to and inhibits KRAS G12C, in combination. During the year ended December 31, 2023, we elected to not exercise our option to participate in a U.S. profit/cost share with Genentech, or the Opt-In Right.
Costs incurred for these programs include costs incurred to support our discovery research and translational science efforts up to the initiation of first-in-human clinical development. Platform research and other research and development activities include costs that are not specifically allocated to active product candidates, including facilities costs, depreciation expense and other costs.
We also have more than seven active discovery stage programs across both precision oncology and genetic diseases. Costs incurred for these programs include costs incurred to support our discovery 90 research and translational science efforts up to the initiation of first-in-human clinical development.
Liquidity and Capital Resources Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for several years, if ever.
Liquidity and Capital Resources As of December 31, 2023, we had cash, cash equivalents, and investments of $750.1 million. Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses.
In December 2020, we entered into the Genentech Agreement with Genentech for the development and commercialization of GDC-1971 (formerly known as RLY-1971). Under the terms of the Genentech Agreement, we received $75.0 million in an upfront payment in 2021, as well as $30.0 million in milestone payments from Genentech through December 31, 2022.
Under the terms of the Genentech Agreement, we received $75.0 million in an upfront payment in 2021, as well as $45.0 million in milestone payments from Genentech as of the date of this Annual Report on Form 10-K.
In the third quarter of 2020, we initiated the RLY-4008 ReFocus Trial for patients with advanced or metastatic FGFR2-altered solid tumors.
Lirafugratinib, or RLY-4008, is a potent, selective and oral small molecule inhibitor of fibroblast growth factor receptor 2, or FGFR2. In the third quarter of 2020, we initiated a first-in-human clinical trial for lirafugratinib, or the ReFocus Trial, which is a two-part global trial in patients with FGFR2-altered tumors.
Payments due upon cancelation consist only of payments for services provided and expenses incurred up to the date of cancelation. For more information, please refer to Note 12, Commitments and Contingencies, and Note 13, Leases, of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Payments due upon cancelation consist only of payments for services provided and expenses incurred up to the date of cancelation.
The increase of $18.8 million was primarily due to $12.8 million of additional employee related costs from increased headcount, including an increase of $6.3 million in stock-based compensation expense, and $6.0 million of other general and administrative expenses in connection with insurance, advisory, consulting, and other expenses.
The increase of $83.7 million was due to $50.0 million of additional external costs in connection with the clinical trials for our lead product candidates, as well as $32.4 million of additional employee costs from increased headcount in our research and development functions, including an increase in stock compensation expense of $17.7 million.
Other Income (Expense), Net Other income, net, was $0.8 million for the year ended December 31, 2021 compared to $3.4 million for the year ended December 31, 2020. The decrease of $2.6 million was primarily a result of changes in interest rates.
The increase of $9.0 million was primarily due to an increase in stock compensation expense, offset by decreases in other employee compensation costs, insurance fees, and other expenses. 93 Other Income, Net Other income, net, was $31.0 million for the year ended December 31, 2023 compared to $8.8 million for the year ended December 31, 2022.
RLY-2608 is the lead program of multiple efforts in our PI3Kα franchise to discover and develop mutant selective inhibitors of PI3Kα. In the fourth quarter of 2021, we announced preclinical data for RLY-2608, in which we observed that RLY-2608 preferentially bound to mutant PI3Kα at a novel allosteric site discovered by the Dynamo platform.
RLY-2608 is the lead program in our efforts to discover and develop mutant selective inhibitors of PI3Kα. In December 2021, we dosed the first patient in a first-in-human clinical trial for RLY-2608, the first known allosteric, pan-mutant and isoform-selective phosphoinostide 3 kinase alpha, or PI3Kα, inhibitor in clinical development, or the ReDiscover Trial.
At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within the contract and determine those that are performance obligations. We then determine the transaction price and allocate it to the performance obligations.
We then determine the transaction price and allocate it to the performance obligations.
Research and Development Expenses The following summarizes our research and development expenses for the years ended December 31, 2021 and 2020: Year Ended December 31, Change 2021 2020 (in thousands) External costs for programs in clinical trials $ 18,367 $ 7,447 $ 10,920 External costs for platform technologies and preclinical programs 69,828 42,431 27,397 Employee related expenses 68,438 38,440 29,998 Other expenses 16,017 11,544 4,473 Total research and development expenses $ 172,650 $ 99,862 $ 72,788 106 Research and development expenses were $172.7 million for the year ended December 31, 2021 compared to $99.9 million for the year ended December 31, 2020.
Research and Development Expenses The following summarizes our research and development expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, Change 2023 2022 (in thousands) External costs for programs in clinical trials $ 101,055 $ 51,094 $ 49,961 External costs for platform technologies and preclinical programs 74,474 80,612 (6,138 ) Employee related expenses 125,471 93,118 32,353 Other expenses 29,018 21,531 7,487 Total research and development expenses $ 330,018 $ 246,355 $ 83,663 Research and development expenses were $330.0 million for the year ended December 31, 2023 compared to $246.4 million for the year ended December 31, 2022.
During the year ended December 31, 2020, license and other revenue was recognized for substantially all of the $85.0 million upfront payment under the Genentech Agreement upon transfer of the license.
By comparison, we only recognized revenue for research and development services provided under the Genentech Agreement during the year ended December 31, 2022.
Removed
In October 2021, we announced initial clinical data from this trial, which suggested robust inhibition of FGFR2 in the first 49 subjects that was not observed to be limited by off-target toxicities, including hyperphosphatemia and diarrhea, as of the data cut-off date of September 9, 2021.
Added
In July 2023, we initiated a dose expansion cohort in patients with PI3Kα-mutant, HR+, HER2- locally advanced or metastatic breast cancer, with patients receiving a 600 mg twice daily, or BID, dose of RLY-2608 in combination with fulvestrant.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+1 added−0 removed19 unchanged
Biggest changeWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 23, 2023 expressed an unqualified opinion thereon.
Biggest changeWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 22, 2024 expressed an unqualified opinion thereon.
We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) designed to ensure that information required to be disclosed in the 113 reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure.
We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K.
Evaluation of Disclosure Controls and Procedures Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as 101 of the end of the period covered by this Annual Report on Form 10-K.
As of December 31, 2022, our investments consisted of investments in U.S. treasury bills and United States agency securities that have contractual maturities of less than two years. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates.
As of December 31, 2023, our investments consisted of investments in U.S. treasury bills and United States agency securities that have contractual maturities of less than two years. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates.
As of December 31, 2022, we estimate that such hypothetical 100 basis point adverse movement would not result in a material impact on our condensed consolidated results of operations. As of December 31, 2022, we had no debt outstanding and, therefore, are not exposed to interest rate risk with respect to debt.
As of December 31, 2023, we estimate that such hypothetical 100 basis point adverse movement would not result in a material impact on our condensed consolidated results of operations. As of December 31, 2023, we had no debt outstanding and, therefore, are not exposed to interest rate risk with respect to debt.
Under the supervision of and with the participation of our principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 framework).
Under the supervision of and with the participation of our principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 framework).
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Interest rate risk We are exposed to market risk related to changes in interest rates of our investment portfolio of cash equivalents and short-term investments. As of December 31, 2022, our cash equivalents consisted of money market funds.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Interest rate risk We are exposed to market risk related to changes in interest rates of our investment portfolio of cash equivalents and short-term investments. As of December 31, 2023, our cash equivalents consisted of money market funds.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2022, our disclosure controls and procedures were effective. Internal Control over Financial Reporting Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2023, our disclosure controls and procedures were effective. Internal Control over Financial Reporting Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Opinion on Internal Control Over Financial Reporting We have audited Relay Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Relay Therapeutics, Inc.
Opinion on Internal Control Over Financial Reporting We have audited Relay Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Relay Therapeutics, Inc.
Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2022. Our independent registered public accounting firm has issued an attestation report of our internal control over financial reporting. This report appears below.
Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2023. Our independent registered public accounting firm has issued an attestation report of our internal control over financial reporting. This report appears below.
We estimate that a 10% increase or decrease in current exchange rates would not have a material effect on our financial results for the years ended December 31, 2022, 2021, and 2020.
We estimate that a 10% increase or decrease in current exchange rates would not have a material effect on our financial results for the years ended December 31, 2023, 2022, and 2021.
Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 114 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Relay Therapeutics, Inc.
Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 102 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Relay Therapeutics, Inc.
(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.
(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Boston, Massachusetts February 23, 2023 115 It em 9B. Other Information. None.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Boston, Massachusetts February 22, 2024 103 It em 9B. Other Information.
Added
Rule 10b5-1 Trading Plans During the three months December 31, 2023 , none of our directors or officers adopted , materially modified , or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any non-Rule 10b5-1 trading arrangement.

Other RLAY 10-K year-over-year comparisons