Relay Therapeutics Inc
For the period ended Dec 31, 2023. Filed Feb 22, 2024.
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FY2023 · Filed Feb 22, 2024
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Relay Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Relay Therapeutics, Inc. (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 (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'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), and our report dated February 22, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| Valuation of Contingent Milestone Payments Liability | |
| Description of the Matter | As discussed in Notes 3 and 10 to the consolidated financial statements, the Company’s acquisition-related Contingent Milestone Payments Liability is remeasured to its estimated fair value each reporting period. As of December 31, 2023, the acquisition-related Contingent Milestone Payments Liability was $8.2 million.Auditing the valuation of the Contingent Milestone Payments Liability was especially subjective and judgmental due to the significant estimation required in determining the fair value. In particular, the fair value estimate was sensitive to significant assumptions including the probability of milestone achievement. |
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| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s valuation of the Contingent Milestone Payments Liability. For example, we tested controls over management’s review of the valuation model and the significant assumptions utilized in the calculation, which is the probability of achieving certain platform and program-related milestones.To test the valuation of the Contingent Milestone Payments Liability, we performed audit procedures that included, among others, assessing the terms of the arrangement, evaluating the methodology used, testing the significant assumptions discussed above and testing the completeness and accuracy of the underlying data. For example, to test the estimated probability of achieving milestones, we considered the stage of development of the research in relation to relevant external data and discussed these probabilities with the Company’s executives, including those in research and development. In addition, we performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value of the Contingent Milestone Payments Liability resulting from changes in the significant assumptions. |
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/s/Ernst & Young LLP
We have served as the Company’s auditor since 2017.
Boston, Massachusetts
February 22, 2024
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