Relay Therapeutics, Inc. Fair Value Disclosure
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:
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Fair Value Measurements as of |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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(in thousands) |
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Assets |
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|
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Cash equivalents: |
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Money market funds |
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$ |
80,313 |
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|
$ |
— |
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|
$ |
— |
|
|
$ |
80,313 |
|
Total cash equivalents |
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80,313 |
|
|
|
— |
|
|
|
— |
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|
80,313 |
|
Investments: |
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U.S. treasury bills |
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— |
|
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401,184 |
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|
— |
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|
401,184 |
|
U.S. agency securities |
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— |
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69,316 |
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|
— |
|
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|
69,316 |
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Total investments |
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— |
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|
470,500 |
|
|
|
— |
|
|
|
470,500 |
|
Total assets |
|
$ |
80,313 |
|
|
$ |
470,500 |
|
|
$ |
— |
|
|
$ |
550,813 |
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Liabilities |
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Contingent Milestone Payments |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
|
Total liabilities |
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$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
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|
Fair Value Measurements as of |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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(in thousands) |
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Assets |
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Cash equivalents: |
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Money market funds |
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$ |
122,128 |
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|
$ |
— |
|
|
$ |
— |
|
|
$ |
122,128 |
|
Total cash equivalents |
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122,128 |
|
|
|
— |
|
|
|
— |
|
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|
122,128 |
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Investments: |
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|
|
|
|
|
|
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U.S. treasury bills |
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— |
|
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564,083 |
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|
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— |
|
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|
564,083 |
|
U.S. agency securities |
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— |
|
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|
92,953 |
|
|
|
— |
|
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|
92,953 |
|
Total investments |
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— |
|
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|
657,036 |
|
|
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— |
|
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|
657,036 |
|
Total assets |
|
$ |
122,128 |
|
|
$ |
657,036 |
|
|
$ |
— |
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|
$ |
779,164 |
|
Liabilities |
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|
|
|
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Contingent Milestone Payments |
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$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
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Total liabilities |
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$ |
— |
|
|
$ |
— |
|
|
$ |
— |
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|
$ |
— |
|
In determining the fair value of its investments at each date presented above, the Company relied on quoted prices for similar securities in active markets or using other inputs that are observable or can be corroborated by observable market data.
Fair Value of Contingent Consideration
In 2021, the Company acquired ZebiAI.
Pursuant to the terms of the acquisition, the Company is liable for certain contingent consideration, including (a) up to $85.0 million in platform and program milestones ("Contingent Milestone Payments") and (b) up to $100.0 million in earnout payments ("Contingent Earnout Payments"), both payable to ZebiAI's former equity holders upon achievement.
The Company classified the Contingent Milestone Payments within Level 3 of the fair value hierarchy. Pursuant to ASC Topic 480, Distinguishing Liabilities from Equity ("ASC 480"), the Company has accounted for the Contingent Milestone Payments as a liability and remeasured the fair value at each reporting period based on the probability of achieving the milestones and timing. Significant judgment has been used in determining the underlying assumptions. In connection therewith, the liability was recorded at $0 on the consolidated balance sheet as of December 31, 2025.
The Company has not accounted for the Contingent Earnout Payments as derivatives under ASC Topic 815, Derivatives and Hedging ("ASC 815"). As such, they were only measured at fair value as of the acquisition date and have not been re-assessed at fair value as of each reporting period end. During the year ended December 31, 2024, the contingency was resolved without the consideration becoming payable. Therefore, the liability was recorded at $0 on the consolidated balance sheet as of December 31, 2025.
The following table reconciles the change in the contingent consideration liability:
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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(in thousands) |
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Balance at beginning of period |
|
$ |
— |
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|
$ |
13,206 |
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$ |
32,378 |
|
Change in fair value of Contingent Milestone Payments |
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|
— |
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(8,206 |
) |
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(6,422 |
) |
Change in carrying value of Contingent Earnout Payments |
|
|
— |
|
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(5,000 |
) |
|
|
— |
|
Common stock issued upon milestone achievement |
|
|
— |
|
|
|
— |
|
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(12,750 |
) |
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|
$ |
— |
|
|
$ |
— |
|
|
$ |
13,206 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 25, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.