Shares of Relay Therapeutics Inc (NASDAQ:RLAY) jumped 5.8% in premarket trading on Monday after Oppenheimer upgraded the biotechnology company to Outperform from Perform and set a new price target of $14.00.
Analyst Matt Biegler pointed to potential near-term catalysts for Relay’s mutant-selective inhibitor zovegalisib, particularly ahead of the upcoming VIKTORIA-1 clinical trial results for rival drug gedatolisib. Biegler expects the VIKTORIA-1 data to disappoint, arguing that the trial “will underperform expectations, and may even fail,” which could improve the competitive outlook for Relay’s program.
“We think anything less than ’teenage’ mPFS for the gedatolisib triplet would create a beatable bar for Relay, who is developing a competing triplet with zovegalisib,” Biegler wrote in his note. He also likened gedatolisib to everolimus, suggesting it could encounter comparable limitations in PI3K inhibition.
Relay’s stock has faced pressure since October, when early data from the wild-type cohort of the VIKTORIA-1 study exceeded investor expectations. However, Oppenheimer believes achieving similar results in patients with PI3K-mutant disease will be more challenging for gedatolisib, especially in light of recent clinical outcomes from competing therapies.
The newly issued $14.00 price target implies substantial upside from current levels, underscoring Oppenheimer’s confidence in Relay Therapeutics’ positioning within the targeted oncology space.