Revolution Medicines, Inc. Q1 FY2022 Earnings Call

Good day. My name is Katherine, and I'll be your conference facilitator today. Welcome to the Revolution Medicines First Quarter and 2022 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. I would now like to hand the conference over to David Errington, Revolution Medicines, SVP of Investor Relations and Corporate Affairs for opening remarks. David, you may begin.

Thank you, and welcome, everyone, to our first quarter earnings call. Joining me on today's call are Dr. Mark Goldsmith, Revolution Medicines' Chairman and Chief Executive Officer; Dr. Steve Kelsey, the company's President of Research and Development; and Jack Anders, our SVP of Finance and Principal Accounting Officer. Today, we will be referencing selected slides from our corporate presentation. The complete set is available for you to view and download on revmed.com. As we begin, I would like to note that our presentation will include statements regarding the current beliefs of the company with respect to our business that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are subject to a number of assumptions, risks, and uncertainties. Actual results may differ materially from these statements. And except as required by law, the company undertakes no obligation to revise any forward-looking statements. I encourage you to review the legal disclaimer slide of our corporate presentation or the earnings press release as well as all of the company's filings with the SEC concerning these and other matters. With that, I will turn the call over to Dr. Mark Goldsmith, Revolution Medicines' Chairman and Chief Executive Officer.

Thanks, David. Good afternoon, everyone. Thank you all for joining us today. I'll start with a few top-line comments. We've made great progress in the first quarter. We continue to advance what we believe is the deepest portfolio of RAS-targeted therapeutics in the field, led by our RAS on inhibitors in development with significant opportunity for patient impact. Excessive RASon-signaling drives some 30% of all human cancers. Today, I am very pleased to let you know that we have submitted the IND for RMC-6236, our RAS multi-ON-inhibitor, and expect to dose the first patient in mid-2022. Preparation of the IND for RMC-6291, our KRAS G12C inhibitor, is also on track with our original guidance, and we expect to dose the first patient in the second half of 2022. These two RASon inhibitors approaching the clinic and an exciting pipeline behind them represent a wave of RASon inhibitor drug candidates that could address the majority of RAS-addicted cancers that lack effective targeted drugs. Concurrently, we continue clinical evaluation of the class-leading RAS companion inhibitors RMC-4630 and RMC-5552 that are intended as combination agents with direct RAS inhibitors, including our own RASon inhibitors to maximize patient benefit. Regarding our development-stage compounds, we are transitioning our communication schedule. Going forward, we plan to focus milestones for development-stage programs on clinical initiation rather than IND submissions. Investors should look to our postings on clinicaltrials.gov for indications that an IND is open and that clinical investigation sites are being activated to enable study initiation. We also plan to communicate after we've begun dosing patients in each program. Revolution Medicines has a deep science-driven pipeline of targeted therapies for RAS-addicted cancers. We have four RASon drug candidates that are supported by robust and growing data sets that have large clinical opportunities with the potential to serve patients with a wide range of RAS-addicted cancers. Further, we expect that our pipeline will continue to grow with highly distinctive new assets deriving from our RAS cancer innovation engine, which should expand our reach to other key oncogenic mutations on RAS proteins. Although RAS-addicted cancers are induced primarily by mutations that cause RAS proteins to behave as cancer drivers, often, these cancers are also supported and maintained by other cellular proteins we call RAS cooperating targets and pathways. We believe it is important scientifically to match our treatment strategies to this biological cooperativity by developing RAS companion inhibitors to suppress the cooperating proteins while deploying RASon inhibitors to suppress the primary RAS drivers. Lastly, I note that in many instances, we expect drugs of these two types may be combined to deliver the greatest clinical benefit. In the next few minutes, I'll highlight examples of three specific themes that are important to our strategy. First, RASon inhibitors demonstrate compelling monotherapy antitumor activity in diverse preclinical models of genetically defined RAS cancers. Second, RASon inhibitors can be combined with RAS companion inhibitors to improve antitumor activity in preclinical models that are less sensitive to monotherapy. And third, RASon inhibitors as monotherapies reverse the immunosuppressive tumor microenvironment in RAS-driven cancer models and can unlock profound antitumor immunity when combined with immune system modulators such as PD-1 checkpoint inhibitors. Now, I'll turn to specific comments about our portfolio progress. The first theme is RASon inhibitors as highly active monotherapy agents preclinically. We have produced a large collection of tri-complex inhibitors targeting diverse oncogenic RAS variants through highly differentiated chemical and pharmacologic profiles. As a first example, RMC-6236 is a potent oral RASon selective inhibitor with broad potential across cancers driven by a variety of RAS mutations. To date, it has been shown to be active in three histotypes including pancreatic, colorectal, and non-small cell lung cancer models and across mutations including KRAS G12D, KRAS G12V, and KRAS-G12R, cancer drivers for which patients whose tumors bear these mutations lack targeted therapy options. We are on the path to clinical data now that the IND has been submitted. We expect to announce dosing of the first patient in a monotherapy dose escalation study in mid-2022. And in 2023, we plan to provide evidence of first-in-class single-agent activity for RMC-6236. I also note that RMC-6236 may also be deployed as a RAS companion inhibitor in combination with mutant selective RASon inhibitors, something I will say a bit more about later. As another example, RMC-6291 is a potent oral selective covalent inhibitor of KRAS G12C with a differentiated preclinical profile designed to serve patients with cancers driven by the KRAS G12C mutation, including lung, colorectal, and pancreatic cancers. RMC-6291 has demonstrated best-in-class potential for treating KRAS G12C-driven lung cancers, non-small cell lung cancers, based on superior outcomes in a mouse clinical trial with KRAS G12C lung cancer models. Our IND preparation is on track for submission in the first half of 2022, and we anticipate RMC-6291 will be our second RASon inhibitor program to enter the clinic this year and expect to disclose preliminary evidence of superior activity over the first-generation KRAS G12C inhibitors in 2023. As a third example, RMC-9805 is an oral selective covalent inhibitor of KRAS G12D, the primary tumor driver for more than 50,000 new patients annually in the United States, predominantly patients with colorectal, pancreatic, or non-small cell lung cancer. RMC-9805 exhibits a highly differentiated profile, and we believe it is one of our most technically sophisticated RASon inhibitors to date. It uniquely engages the KRAS G12D cancer variant covalently through the oncogenic aspartic acid residue by taking advantage of a proprietary chemical warhead, a bespoke linker, and our tri-complex binding modality. These design elements deliver a highly distinctive preclinical profile that includes oral bioavailability and selective and irreversible inhibition of this important cancer target. When administered orally to mice engrafted with the KRAS G12D tumor, RMC-9805 achieves favorable plasma exposures, dramatically suppresses mRNA, a molecular biomarker of RAS pathway signaling for over 24 hours due to its irreversible inactivation of the target. We believe RMC-9805 is the first ever drug candidate described that can covalently modify an aspartic acid residue in a targeted protein, drives deep and durable antitumor responses in pancreatic and colorectal cancer models in vivo upon oral dosing, and it is well tolerated. Lastly, RMC-8839 is an oral selective covalent inhibitor of KRAS G13C. We believe it is the first compound to directly inhibit KRAS G13C, a target primarily for lung and select colorectal cancer patients who are currently not served by a targeted RAS inhibitor. In our pipeline expansion programs, we continue leveraging our RAS innovation engine to identify additional orally bioavailable tri-complex RASon inhibitors to target RAS variants driving RAS-addicted cancers that are unserved by current targeted drugs. As illustrated on this slide, our tri-complex inhibitors bind to RAS proteins at a site that provides the opportunity for direct chemical interaction with amino acids at each of the three well-recognized mutational hotspots affecting residues G12, G13, or Q61. This binding geometry is leveraged in each of our programs to design compounds that are selective in engaging mutant variants at these positions that are responsible for most RAS-addicted cancers. Today, I'll share compelling initial data about RM-043, a representative mutant selective non-covalent inhibitor of KRAS Q61H that was shown for the first time at the recent AACR Annual Meeting. RM-043 exhibited nanomolar activity in cells driven by the KRAS Q61H variant and is selective for KRAS Q61H over wild-type RAS, driving deep responses in a KRAS Q61H xenograft model of lung cancer. To our knowledge, this is the first example of a targeted RAF inhibitor directed at an oncogenic RAS variant at the Q61 mutation hotspot. This compound not only represents proof of principle for selective targeting of codon 61 by tri-complex inhibitors but also demonstrates that this modality can be leveraged to develop highly mutant selective inhibitors even when covalent bonding is not feasible. The second theme and parallel approach that I'll talk about today is that our RAS companion inhibitors in development may be combined with RASon inhibitors to improve antitumor activity in preclinical models that are less sensitive to monotherapy. These RAS companion inhibitors are targeted drugs that suppress cooperating targets and pathways known to work in coordination with RAS cancer drivers to sustain RAS cancers and in some instances, confer drug resistance. We believe that combining best-in-class RASon inhibitors with best-in-class RAS companion inhibitors offers the greatest chance of pathway suppression and durability of response to deliver the best clinical outcomes. Ultimately, the optimal RASon and companion inhibitor strategy will likely be disease-specific. I will highlight here two clinical stage assets that support combination treatment approaches. First, RMC-4630 is a potent oral small molecule that is designed to selectively inhibit the activity of SHP2, an upstream cellular protein that plays a central role in modulating cell survival and growth by facilitating RAS pathway signaling. Amgen continues its initial evaluation of dosing RMC-4630 in combination with sotorasib in second-line treatment of various KRAS G12C tumors in the U.S. CodeBreaK 101 study and recently announced that it has submitted initial data from this study to a medical congress for late summer. Revolution Medicine's clinical study called RMC-463003 is progressing and continues to enroll. This is a global Phase II study of RMC-4630 in combination with sotorasib in patients with advanced non-small cell lung cancer with a KRAS G12C mutation who have failed prior standard therapy and who have not been previously treated with a RAS inhibitor. We are on track to enroll the study fully this year and have sufficient data by the end of the year to share some of the high-level findings. Second, RMC-6236, the exciting RAS multi-on inhibitor I described earlier, is notable within our broad RASon inhibitor portfolio because it, in particular, has the potential to be deployed as a RAS companion inhibitor as well as a primary cancer driver targeted agent. In some clinical contexts, patients may gain maximal clinical benefit from the broad activity of this RAS multi-on inhibitor in combination with the deep and sustained target coverage provided by a mutant-selective RASon inhibitor, such as RMC-6291. At the AACR meeting, we reported that RMC-6236 in combination with RMC-6291 demonstrated enhanced antitumor activity in KRAS G12C non-small cell lung cancer and colorectal cancer models that are relatively resistant to single-agent treatments. An example shown on this slide, CRC 022 is one such KRAS G12C colorectal cancer model, in which either the G12C inhibitor RMC-6291 or the RAS multi-inhibitor RMC-6236 as a single agent slows tumor growth but fails to induce tumor regressions. In contrast, combining these two agents converts the impact into significant tumor regression. Lastly, RMC-5552 continues to advance. This drug candidate is a potent, first-in-class mTORC1 selective inhibitor designed to suppress phosphorylation and inactivation of 4E-BP1 for cancers with hyperactive mTORC1 signaling, including certain RAS-addicted cancers. We aim to combine RMC-5552 with RAS inhibitors in patients with cancers harboring RAS and mTOR pathway co-mutations. We are making progress in our ongoing Phase I/Ib clinical trial, evaluating RMC-5552 as a monotherapy and are now focused on dose optimization in preparation for combinations with RASon inhibitors. Our third theme is unlocking the antitumor immune response by targeting RAS cancer drivers within tumors. We have seen multiple examples in which RASon inhibitors as monotherapies reverse the immune-suppressive tumor microenvironment in RAS-driven cancer models and can unlock profound antitumor immunity when combined with immune system modulators such as PD-1 checkpoint inhibitors. In particular, both RMC-6236 and RMC-6291 alone can favorably transform the immune microenvironment in RAS tumors and are highly additive with a checkpoint inhibitor. RMC-6236 favorably transforms the tumor immune microenvironment by modulating both the adaptive and innate immune cells infiltrating these RAS-addicted tumors, and these changes significantly increase the sensitivity of such tumors to immune checkpoint inhibitors. Hence, the combination of RMC-6236 with a checkpoint inhibitor achieves profound, durable, and even complete antitumor responses in some preclinical models in mice with intact immune systems. RMC-6291 is also able to modulate the immune microenvironment via tumor intrinsic effects that prime cancer cells for antitumor immunity in the presence of a checkpoint inhibitor. Here, we show this combination is also able to drive complete responses in an immunogenic model of KRAS G12C cancer. In summary, these prepared comments have provided an update on our portfolio across three core themes that are important to our strategy. First, RAS inhibitors demonstrate compelling monotherapy antitumor activity in diverse preclinical models of genetically defined RAS cancers. Second, RASon inhibitors can be combined with RAS companion inhibitors to improve antitumor activity in preclinical models that are less sensitive to monotherapy. And third, RASon inhibitors as monotherapies reverse the immunosuppressive tumor microenvironment in RAS-driven cancer models and can unlock profound antitumor immunity when combined with immune system modulators such as PD-1 checkpoint inhibitors. These concepts in conjunction with preclinical data sets behind each of the development stage assets in our R&D portfolio underline our belief that we may be able to serve significant unmet clinical needs for patients with a wide range of RAS-addicted cancers. I'll now turn to Jack Anders, our Senior Vice President of Finance, to report on our financial condition. Jack?

Thank you, Mark. The details of our financial results are in our press release, so I'll focus on a few highlights as shown on Slide 36. We ended the quarter with $519 million in cash and investments. Revenue from our collaboration agreement with Sanofi was $7.6 million in the first quarter of 2022. The decrease in revenue from the prior year period was due to lower development cost reimbursement from Sanofi. Total operating expenses for the first quarter of 2022 were $65.5 million and increased by 38% over the prior year period. The increase in operating expenses was largely due to R&D expenses associated with our preclinical portfolio and increased headcount. Net loss for the first quarter of 2022 was $57.6 million or $0.78 per share. Our financial guidance for 2022 remains unchanged, and we continue to expect full year GAAP net loss to be between $260 million and $290 million, which includes estimated noncash stock-based compensation expense of between $35 million to $40 million. And with that, I'll now turn the call back over to Mark.

I'm proud of the continued excellent execution by our R&D team with support from our broader organization and many partners and collaborators. We expect to have two RASon inhibitors in the clinic this year and to advance two additional RASon programs subsequently. We're pursuing an exciting multipart approach aiming to outsmart RAS-driven cancers, including both RAS inhibitors and RAS companion inhibitors. We believe that Revolution Medicines is in an excellent position to continue aggressively pursuing our mission on behalf of cancer patients whose participation in our clinical studies is deeply appreciated. This concludes our prepared remarks for today. And I will now turn the call over to the operator for the Q&A session.

Our first question comes from Marc Frahm with Cowen.

Congrats on all the progress in getting the INDs filed. Maybe just starting with RMC-6236 and RMC-6291, maybe Mark, if you could describe just kind of what you've submitted in terms of starting dose? And how close is that to what you think might be the active range if the preclinical modeling on exposures is correct? And within RMC-6236, how might that dose differ based on the underlying RAS alteration?

Mark, thanks for your questions. I think with regard to the specifics of starting dose, I don't think that's something that we'll be disclosing today. I will say pharma, obviously, given that it is a RAS multi-inhibitor. And we know at some point, it will have effects on normal tissues. We certainly are starting on the lower end to make sure that we creep up on the optimal dosing. But beyond that, I don't really have anything more specific to say today. With regard to whether the dosing will differ across different mutants, maybe I can ask Steve Kelsey, our President of R&D, to comment on that question. I think it's highly unlikely, and that's certainly not the intent. I don't think there's any preclinical justification for believing that the dosing schedule would be different from diversity for any given genotype, particularly as a single agent. I think exploring the optimal dose and schedule for RMC-6291 may involve adjustments either to the dose schedule of both agents if we see that in combination. But as a single agent inhibitor of RAS mutations, I don't think so.

Okay. And then just brought up combos, and that's obviously part of the longer-term strategy here. I guess, what do you need to see to start opening up those combos? Is it just safety at reasonable exposures or do you want to see clinical activity? Do you want to see a recommended Phase II dosing schedule for these agents? Just when do you open up that part of the program?

Right now, the strategy for RMC-6291 is to really start combinations as soon as we possibly can, and the minimum amount of information we need is some preliminary tolerability data, and we also need to make sure that we've got the schedule right. It's complicated, and it's not immediately obvious what a long value schedule is right for any given scenario. So we need to ensure we know about the pharmacokinetics, and we need to make sure that our schedule is appropriate. Then we can start combinations with RMC-6291. Combining it with RMC-6236 is also a high priority right now given our understanding of the mechanisms of escape from other therapies. With regards to using RMC-6236 as a RAS mutant inhibitor in combinations, that may take a bit longer as we need to understand more about the toxicity profile of combinations with other agents. I don't see any real barrier to starting combinations of RMC-6236 with the mutant selective RAS inhibitor RMC-6291 as soon as we can. The urgency around getting combinations with RMC-6291 is higher given its entry into a more competitive space, where there are multiple other KRAS inhibitors. Hence it makes sense for us early in that program to include the best combination agents that align with our preclinical work and mechanistic understanding.

Our next question comes from Michael Smith with Guggenheim.

Maybe just a couple of ones, maybe sort of following up on the comments from just now. I guess on RMC-6291, in terms of the longer-term development strategy and the regulatory path, do you view it as a monotherapy player? And if so, I guess, would that need to be in a sort of asset refractory patient population? Or is it mainly viewed as a combination strategy that would sort of differentiate the drug from others?

I think we have a few things to say about that. The approval of sotorasib is basically dividing the non-small cell lung cancer space into two groups: patients that get treated before undergoing standard chemotherapy, and those who do after. There is an opportunity potentially to use RMC-6291 as a single agent in the salvage space. It's not our primary strategy, but there are mechanistic grounds to believe that it would work there in some patients that may fail on other therapies. However, we believe the best approach for those patients is some sort of combination that includes a KRAS inhibitor, and we would prefer RMC-6291. The most straightforward place for RMC-6291 as a single agent would be in patients with KRAS mutations currently treated with sotorasib. If the data we've seen supports this in the clinic, then there could be a significant opportunity for RMC-6291 to be approved as a single agent. However, we still believe that combining it with a companion inhibitor will likely provide the best treatment approach for patients.

All right. That makes sense. And then on RMC-6236, I guess, you're positioning it as a combination drug to some degree with something like RMC-6291. My question is, what percentage of patients that are treated with a G12C selective inhibitor would benefit from the multi-inhibitor addition, considering resistance mechanisms? And how would that combination compare to something like a SHP2 inhibitor combination, for example?

There are many layers to your question. If you refer to something Steve mentioned, the preclinical data with RMC-6291 suggests that it alone is superior in direct competition with a treatment like sotorasib in lung cancer models. We anticipate seeing similar results in clinical settings. However, it's essential to address the resilience of RAS pathway-driven cancers, which can be quite complex. Therefore, it is crucial to explore both monotherapy and combination strategies. The effectiveness of combinations may vary based on the specific context. With regard to RMC-6236's suitability as a RAS companion compared to RMC-4630, we currently lack data on which one is most advantageous. We think of RMC-6236 primarily as an inhibitor targeting cancers not currently addressed by RAS inhibitors, while considering that combining it with a RAS mutant inhibitor like RMC-6291 may provide additional benefits. Ultimately, both strategies are important.

Our next question comes from Christopher Zap with Goldman Sachs.

I wanted to talk a little bit more about RMC-4630. We have a couple of data sets coming up in the second half of the year. The two studies were set up because of limitations in the CodeBreaK study regarding clear answers for what we can see with SHP2 inhibition in lung cancer. I was wondering what you hope to learn with the Amgen update towards the late summer, and how might that augment the plans for the next steps with RMC-4630? Will the next steps become clear with that data and combining what you'll show from the RMC-4630-03 study later this year?

Thanks for your question. Anticipating what Amgen will or will not show this summer, we can't comment on that, as they are the study sponsor. However, the easy answer is to discuss the implications after they present their results. Regarding the first part of your inquiry, the CodeBreaK study and the RMC-4630-03 study are complementary and overlap in some aspects. Amgen had a head start with the CodeBreaK study, and they have gathered data on dosing tolerability, safety, and patient outcomes. Our study is designed to build on that knowledge with a dedicated approach. We are looking to understand the sensitivity of non-small cell lung cancers with a KRAS G12C mutation and evaluate how different co-mutations in RAS and RAS-related signaling may affect the outcomes. We will utilize the results of both studies to inform our design of a compelling Phase III study moving forward.

Our next question comes from Eric Joseph with JPMorgan.

Congrats on the progress. Coming back to RMC-6236, we were wondering how we should be thinking about the patient demographics eligible for the Phase I study by tumor mutational backgrounds and histology, and perhaps PD-1 status? How broadly are you exploring potential activity and pharmacodynamics in the Phase I study beyond safety and pharmacokinetics?

Thanks for your question. The protocol allows for patients with advanced cancer eligible for a Phase 1 trial who also have a mutation in KRAS-G12 position. We expect the majority of these patients will have non-small cell lung cancer, pancreatic cancer, or colorectal cancer, given their distribution in the population. These will be patients who have previously failed available therapies. As we progress, we will refine the program and potentially include patients with different mutations or combinations based on signals we observe. We also include a backfill recruitment mechanism that allows us to expand for patients who fall below the maximum tolerated dose, giving us more opportunity to gather diverse data. Our primary focus at first will be to demonstrate that the agent is effective and safe. In conjunction with evaluating biomarkers for sensitivity, we aim for efficacy markers as the primary endpoints, supported by imaging assessments.

Thank you. Our final question comes from Jonathan Chang with SVB Securities.

I wanted to ask about RMC-5552. We saw the title in the ASCO program, and I wanted to see if you could help set expectations for that data update and what we might see relative to what you disclosed in January.

Thanks for your question. We don't have a formal update on the RMC-5552 program as of yet. We've dosed 14 patients across 5 dose levels. We are still focused on dose optimization to ensure we get it right for single-agent expansion and subsequently in combination with our RASon portfolio. At 6 milligrams weekly, we have an active drug, and we may be able to increase the dose slightly, but not to 12 milligrams weekly. Most of the toxicity we encounter is targeted and manageable.

Great. And then, can you remind us what we know about potential CNS activity of the RAS inhibitors?

We don’t know much about CNS activity, as it hasn’t been a major focus of research so far. These compounds are relatively large and may not cross the blood-brain barrier effectively. Currently, we are concentrating on systemic disease therapies, where we still have much to explore before declaring success.

Thank you for your questions. This concludes our conference call. Thank you for participating today. You may now disconnect. Everyone, have a great day.