TOKYO — SoftBank Group-backed U.S. biotech startup Relay Therapeutics gained 75% on its trading debut on Nasdaq, raising hopes for a recovery in the performance of Softbank’s $100 billion Vision Fund.
Shares in Relay, which is developing drugs for cancer treatment, closed at $35.05 on Thursday compared to its offering price of $20, giving the company a market capitalization of about $3 billion. It raised $400 million from an initial public offering.
The Vision Fund invested $300 million in 2018, according to Relay’s prospectus. Its 32% stake in the company is now worth about $1 billion.
Relay was the first Vision Fund-backed company to list this year. In total, nine of the fund’s portfolio of 88 companies have gone public, including ride-hailing provider Uber Technologies and workplace messaging service Slack Technologies.
If Relay maintains its current share price, the Vision Fund will be able to sell the stake at a profit, something that it has struggled to do in recent months. The fund posted a 1.9 trillion yen ($17 billion) investment loss for the year ended March as the coronavirus pandemic dented the value of Uber and other portfolio companies.
In contrast to conventional venture capital funds, the Vision Fund relies on a steady stream of exits because it pays outside investors, such as Saudi Arabia’s sovereign wealth fund, a 7% annual coupon on part of their investment.
Some $2.5 billion of the Vision Fund has been invested in health tech, according to Softbank, including the $300 million in Relay. The investments had a fair value of $4.8 billion at the end of March, according to Softbank.
Vision Fund CEO Rajeev Misra hailed the potential of companies such as Relay. “You have now people doing both diagnostic and discovery using data,” Misra said in a recent video-streamed event. “The monopolistic power of large pharma companies is coming down and the smaller companies are giving them a run for the money.”