Revolution Medicines Inc (RVMD) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to Revolution Medicines' Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Erin Graves, Senior Director of Corporate Communications and Investor Relations. Please go ahead.

Thank you, and welcome, everyone, to the Second Quarter 2023 Earnings Call. Joining me on today's call are Dr. Mark Goldsmith, Revolution Medicines' Chairman and Chief Executive Officer; and Jack Anders, our Chief Financial Officer. Dr. Steve Kelsey, our President of R&D, will join us for the Q&A portion of today's call.

As we begin, I would like to note that our presentation will include statements regarding the current beliefs of Revolution Medicines with respect to our business and the proposed acquisition of EQRx, including statements regarding our development plans and time lines for our portfolio and pipeline and the expected timing and benefits of the proposed acquisition, all of which are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements.

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 or update any forward-looking statements. I encourage you to review the legal disclaimer slide of our corporate presentation, our earnings press release and all of our filings with the SEC concerning these and other matters.

In connection with the proposed EQRx acquisition, Revolution Medicines and EQRx intend to file documents with the SEC, including a registration statement on Form S-4 containing a joint proxy statement and prospectus. Investors and security holders are urged to read carefully the joint proxy statement and prospectus when it is filed with the SEC and other documents filed by either Revolution Medicines or EQRx with the SEC relating to the proposed transaction when they are filed because they will contain important information.

With that, I will turn the call over to Dr. Mark Goldsmith, Revolution Medicines' Chairman and Chief Executive Officer. Mark?

Thanks, Erin. It's good to be with you for today's call. We'll keep our prepared remarks brief given the update we provided to investors just last week. First, I'll provide a review of company progress, including the significant updates we reported last week on the schedule of upcoming presentations on our first 2 clinical RAS(ON) inhibitors, RMC-6236 and RMC-6291, planning for late-stage development activities and of course, announcement of our planned acquisition of EQRx. Next, Jack Anders will describe our second quarter financial results. And finally, we'll open the line for questions.

Beginning with clinical and development highlights. We announced last week that we will report a significant clinical update on the antitumor activity of RMC-6236, our groundbreaking RAS MULTI ON inhibitor in patients with non-small cell lung cancer or pancreatic cancer to the scientific community in an oral presentation on October 22 at the ESMO Congress 2023.

We also announced our intention to present additional supporting clinical data on RMC-6236 at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics commonly referred to as the Triple Meeting. This presentation will occur in October shortly before ESMO, and Revolution Medicines will deliver an invited plenary presentation entitled Targeting RAS-Addicted Cancers with Investigational RAS(ON) Inhibitors.

Based upon the encouraging data trends we've seen thus far with RMC-6236, we also announced that planning is already underway for one or more single-agent pivotal clinical trials potentially to begin in 2024. Moving on to RMC-6291, our KRAS G12C selective RAS(ON) inhibitor, we plan to present a first report on initial clinical findings with RMC-6291 at the Triple Meeting in October, which will include preliminary evidence of differentiation from RAS(OFF) inhibitors.

In view of growing evidence in support of a favorable tolerability and antitumor activity profile for RMC-6236, we believe it may emerge as our RAS companion inhibitor of choice to be assessed in combination with our mutant-selective RAS(ON) inhibitors. Along with encouraging initial clinical experience with RMC-6291, we are also happy to report that planning is underway for a Phase I/Ib clinical trial to evaluate the combination of RMC-6236 and RMC-6291 potentially to begin in early 2024.

And finally, we are pleased to have announced that site activation under an investigational new drug application is underway for our oral mutant selective KRAS G12D inhibitor, RMC-9805. With these steps, we now have 3 compelling RAS(ON) inhibitors in the clinic, each with its own interesting profile, a major milestone for our company, and we hope, for the field of oncology.

Overall, we are energized by the trajectory we see for our RAS(ON) inhibitor drug candidates to enter late-stage development and by our growing pipeline of additional mutant selective inhibitors behind these. And we look forward to sharing more as these assets progress.

Regarding our SHP2 inhibitor, RMC-4630, decisions about future development will be made after analysis of a complete data set from the RMC-4630-03 study and other considerations, including the potential of RMC-6236 as a RAS companion inhibitor. Likewise, the future development of RMC-5845, our SOS1 inhibitor, which is not expected to offer an advantage over RMC-4630 will be evaluated following analysis of the complete RMC-4630-03 data set and other factors.

Additionally, we are continuing to evaluate RMC-5552 (mTORC1/4EBP1) as a single agent in a Phase I/Ib clinical study with the aim of studying it in the future as a RAS companion inhibitor for use in combination with RAS(ON) inhibitors, particularly in patients with RAS-addicted tumors exhibiting hyperactivation of the mTOR signaling pathway. We expect to provide additional characterization of the single-agent profile for this compound at the upcoming Triple Meeting in October.

Turning to important business news reported last Tuesday, we announced that Revolution Medicines signed an agreement to gain more than $1 billion in additional capital through the acquisition of EQRx, a deal that is focused entirely on strengthening our cash position. We summarized the terms and timing of this transaction last week and provided further details in our 8-K filing, which I encourage investors to review.

With significant additional capital that is supportive of the enormous opportunity created by the scientific advances and clinical momentum we have established to date, this deal will reinforce and help us sustain our parallel development approach for our extensive RAS(ON) inhibitor pipeline in multiple RAS-driven cancers, by enhancing our balance sheet, thereby increasing our company's financial certainty in a challenging macro environment. We're pleased that initial feedback we've received from investors on the transaction has been very positive and with important clinical updates in October and the anticipated close of the acquisition in November, the second half of this year promises to be action packed.

I'll now turn to Jack Anders, our CFO, to provide a financial update. Jack?

Thank you, Mark. Turning to our second quarter financials. We ended the quarter with $909.5 million in cash, cash equivalents and investments. Total revenue for the second quarter of 2023 was $3.8 million, consisting of revenue from the company's now terminated collaboration agreement with Sanofi.

Total operating expenses for the second quarter of 2023 were $112.6 million. The increase in operating expenses over the prior year was largely due to clinical trial and manufacturing expenses for RMC-6236 and RMC-6291, research expenses associated with our preclinical portfolio, and an increase in personnel-related expenses resulting from additional headcount.

Net loss for the second quarter of 2023 was $98.3 million or $0.92 per share. We are reiterating our financial guidance and continue to expect full year 2023 GAAP net loss to be between $360 million and $400 million, which includes estimated noncash stock-based compensation expense of $40 million to $50 million.

Note that we are pleased to strengthen our balance sheet further through the acquisition of EQRx, a transaction we expect will close in November of this year but that our current financial guidance excludes the impact of this proposed transaction.

And with that, I'll now turn the call back over to Mark.

Thank you, Jack. Reflecting on the quarter and looking ahead to the second half of the year, it is an exciting time for Revolution Medicines. With important clinical updates for both RMC-6236 and RMC-6291 in the fall, planning underway for late-stage development of RMC-6236 and a new clinical study of our first intra-pipeline combination featuring RMC-6236 and RMC-6291, RMC-9805 entering the clinic and the anticipated close of the EQRx acquisition to help supercharge our work, we have a very full plate.

Our first-rate team is passionate and highly energized about fulfilling our mission of discovering, developing and delivering pioneering RAS(ON) inhibitor drugs on behalf of patients with RAS-addicted cancers, and we are working hard to provide hope to these patients. Importantly, our work wouldn't be possible without the support of our patients, clinical investigators, scientific and business collaborators, advisers and shareholders.

This concludes our prepared remarks for today, and I'll now turn the call over to the operator for the Q&A session.

(Operator Instructions) Our first question comes from the line of Marc Frahm with TD Cowen.

Maybe just start on the finances, just there's obviously a fair amount of step-up in R&D expense on a quarter-over-quarter basis, and the guidance kind of implies relatively flat the rest of the year. But then you're also talking about "supercharging" the R&D work. Just how should we think about the trajectory of R&D spend kind of as we get late into the year and into next year? You'll have closed the deal. Hopefully, the data looks pretty good and is just finding a lot more trials for 6236.

Marc, thanks for the questions. This is Jack Anders here. I think in terms of our guidance, we're guiding to a net GAAP loss of $360 million to $400 million. Our GAAP net loss for the first half of the year was [$166 million]. So the second half of the year will be a step-up relative to the first half, and we expect it even to be a bit of a step-up relative to where Q2 spend was as well.

And then carrying that forward into next year, kind of how should we think of kind of step changes as you expand out the program? Or is it more incremental?

We haven't provided any guidance relative to 2024. It's fair to say it's not going to decrease relative to the second half of 2023. But we'll provide more guidance around 2024 spend at a future date.

This is from the line of Jonathan Chang with Leerink Partners.

This is Faisal Khurshid on for Jonathan. I wanted to ask if you could provide a little bit more color on what the single-agent path forward could look like for 6236, how you're thinking this could be positioned relative to standard of care and also where you are on regulatory interactions for those studies and what steps need to occur before initiating those.

This is Mark Goldsmith. Thanks for your question. That's a terrific question but probably for another time. We will provide clinical updates this fall as planned, and in conjunction with those disclosures, we expect to provide a little more visibility into what we're thinking. But we'd like to base that forward-looking set of comments on the actual data. So I think at this point, stay tuned, and we'll share more when we're able to do so.

Our next question comes from the line of Chris Shibutani with Goldman Sachs.

This is Charlie on for Chris. Maybe real quick on 6236. Just wondering, as the dose escalation study continues to push higher, how should we be thinking about the selection of a go-forward dose, particularly with respect to combination settings? Just wondering, is there the potential for different doses to be selected for different combos as you look for these combination studies to start next year and just wondering with respect to further widening therapeutic window?

The selection of the optimal single-agent dose for pivotal studies is currently ongoing. And we, like many other people, are feeling our way around that with -- in the context of project Optimus, but obviously, we have a big vested interest in ensuring that we get the dose right for us, as close to right as we could possibly get in the context of Phase I dose escalation and expansion. So I think you just have to trust that we'll do as good a job as we need to do and that we would choose a dose that is efficacious and tolerable over the long term.

With regards to the potential for different doses in combination, I think we will always reserve the right to alter the dose of RMC-6236 in combination if it is necessary to do so. As of today, the safety and tolerability profile that we're seeing does not automatically suggest that we will need to do that. But obviously, as we start those clinical combinations, we will have to react to the individual safety tolerance profile that we see. So I don't think we're expecting that we will have to modify the dose for combinations, but if we need to, then we reserve the right to do so.

Okay. That's helpful. And maybe just a quick follow-up just on the data coming up with 6236. I know that this is going to be for the lung and pancreatic patients in the study. Just wondering if there's an update on the CRC cohort in the study.

Well, we, as we've previously disclosed publicly, do not have a very big database of patients with colorectal cancer in the RMC-6236 Phase I study. And there are a number of reasons for that. The intention is to get as close to a recommended Phase II dose as we can and then look at the activity and safety profile of RMC 6236 in colorectal cancer without dose being a variable. So that's something that will happen in due course.

But having said that, the update on safety and tolerability that we will provide will include a few patients with colorectal cancer. But I don't anticipate that being terribly informative for anybody from the perspective of efficacy. So I think that with regards to efficacy (inaudible) colorectal cancer, it's something that's a high priority for us but yet to evolve.

Our next question comes from the line of Jay Olson with Oppenheimer.

Can you walk us through the rationale behind the doses that you've chosen for dose escalation of 6236 and the timing for when you expect to have a recommended Phase II dose?

I think the question is what's -- how are doses chosen in the dose escalation of 6236. I guess he's asking (inaudible)

(inaudible)

That's what the timing for getting to a recommended Phase II.

Yes. Well, the dose escalation schema that we used was extremely conventional actually. We -- the starting dose was based on the ICH S9 guidelines, which we drew from the -- a reasonably conservative assessment of what we saw in the GLP toxicity studies. And that led us to start at a relatively low dose of 10 milligrams daily.

The percentage increase in dose from then on followed what has been somewhat perversely described as a modified Fibonacci design. It's got absolutely nothing whatsoever to do with Fibonacci Sequence at all. But what it does do is gradually reduce the percentage increase in dose as you go up through the dose escalations.

Right now, we're investigating 400 milligrams daily. 300 milligrams daily was considered reasonably well tolerated. There were some toxicities observed but not anywhere near enough for it to be called the maximum tolerated dose. And really, the timing for declaration of a recommended Phase II dose really depends on what we see at the 400-milligram dose level. The cadence for each dose level right now is somewhere between 6 weeks to 2 months per dose level. That's to get all the patients screened, enrolled and treated and then evaluated.

And so we'll see. I really don't know how close we are to the maximum tolerated dose or the recommended Phase II dosing schedule at the moment. We just know that we're dosing at the dose we're dosing, and we will continue to dose escalate until we hit the top dose.

Okay. Understood. And maybe just as a follow-up, can you elaborate on the timing of the initiation of pivotal studies for 6236 next year? And what factors will impact your decision on the number of pivotal studies you'll be initiating next year? Does it depend on closing the EQRx deal?

No, it's really not about the EQRx deal. It's much more technically driven. You and Steve just had a conversation about selection of the recommended Phase II dose, which absolutely would be required and would require FDA evaluation consideration and then their input into what that dose is. So that process in and of itself just takes a while. And that's after we have the data. And as you and Steve just discussed, we don't yet know what that -- what the end game is for that dose escalation.

So I think that's going to dictate the timing next year. And that's pretty straightforward of an answer to it. And then your second half of that sentence was -- you were asking a second part to that question.

How many pivotal trials.

Yes. We're planning for one or more. And the details of that, again, would be best discussed in the context of data that will be disclosed at the ESMO meeting.

Our next question comes from the line of Ami Fadia with Needham.

With regards to RMC-6236, can you talk about the current standard of care for patients in lung cancer and pancreatic. And what is kind of the comparator there in terms of the response rates or duration of effect? And we've seen some preclinical data from 6236, which gave responses somewhere in the vicinity of 60% overall response rate. Where do you think data in the clinic could fall relative to that?

Well, we certainly can't answer the last question, but we can try to answer the first question and Dr. Kelsey is in the best position to do that.

It's easier just to focus on what happens to patients with non-small cell lung cancer and pancreatic cancer once they fail their first line of chemotherapy for advanced disease, I think. Otherwise, I'll probably (inaudible) for about an hour.

Most of the -- all of the patients in the study right now have received some form of intensive chemotherapy plus or minus immunotherapy for advanced non-small cell lung cancer or pancreatic cancer. Right now, for -- if you don't have a G12C mutation, then the standard of care is docetaxel. There's an option to give a VEGF inhibitor such as ramucirumab with the docetaxel, which has some impact -- on a favorable impact on outcome.

But that's essentially the -- that's the regulatory standard to which anybody would be held in that particular scenario, non-small cell lung cancer has failed platinum doublet chemotherapy as a checkpoint inhibitor. And I think the conventional outcomes are readily assessable from looking at the comparator arm from the Amgen's CodeBreaK 200 study. I mean I think what Amgen saw in the docetaxel (inaudible) study is a really reasonable representation of what would happen in the real world with docetaxel.

Patients with pancreatic cancer is very -- is much more complicated because there's not really a single established standard of care. Patients who are really fit can probably tolerate something like FOLFIRINOX upfront. Patients who are less fit, they get gemcitabine-based chemotherapy upfront. And if they fail that, which they all do, there's not an awful lot left in the therapeutic armamentarium. So a lot of patients go on to other clinical trials.

Most of the chemical trials that have been published have been experimental versions of cytotoxic drugs. And frankly, the outcomes have been pretty poor. I mean the response rates hover around 10% to 14% and progression-free survival is anything -- anywhere between 3 to 3.5 months. So those are the sort of standards that we were looking to beat with RMC-6236.

But as Mark said, the data that we have, which won't be final data by a long shot because we're still dose escalating, the data that we will get, the data cuts immediately before the presentations will be what they are at the time. And neither Mark nor I or -- unfortunately, can predict what we're going to see at this stage. All we know is that we presented some preliminary data back in February, and the data that we have coming in, in real time has been directionally favorable.

Great. And maybe just a quick follow-up on 6291. Can you sort of talk to how you're thinking about -- what is sort of the bar in terms of safety that you'd like to see to be able to sort of explore combination therapy in first line?

Yes. I think that those standards have been pretty well established for the G12C inhibitors. I mean, firstly, the tolerability of any drug has got to be better than single-agent docetaxel. But when specifically with regards to RAS inhibitors, particularly RAS-G12C inhibitors, the real test, I think, of whether any RAS inhibitor is going to be sustainable and beneficial to patients is in lung cancer is whether or not it can be combined with a checkpoint inhibitor.

Checkpoint inhibitors are well-established standard of care in non-small cell lung cancer. And it's very hard to find a niche where they're not recommended. I mean even the metanalysis of the Food and Drug Administration presented at ASCO suggests that the combining chemotherapy with an anti-PD-1 or anti-PDL1 inhibitor is beneficial across the entire representation of patients with non-small cell lung cancer.

So I think that's the real barometer of the safety tolerability profile for a RAS inhibitor. There are other things as well. I mean you can look at the safety profile for adagrasib and sotorasib and get a sense of what's acceptable with regards to GI toxicity and other toxicities. But I think the reality is it's all boiling down to liver toxicity and whether or not you can give these agents in combination with pembrolizumab or within a month of stopping pembrolizumab. But of course, there's still a lot of pembrolizumab floating around in the blood even a month after the last dose. So that's really the key, I think.

Our next question comes from the line of Alec Stranahan with Bank of America.

Two from us. First, just to put a finer point on 6236 pivotal studies. Obviously, appreciating that the majority of this will happen after the data at ESMO. But assuming that you see activity in, say, 2 or 3 tumor types or 2 or 3 different KRAS mutations, would the plan be then to pursue all of those in parallel for the broadest label possible? Or would you prioritize certain tumors or certain mutations first and then seek for label expansions down the road? Then I've got a follow-up.

Yes. I think there are 2 parts to the answer. The first part, Alec, is very much we're committed to as much of a parallel approach to late-stage development as is practical and as makes sense. And in fact, that's part of the motivation for the EQRx acquisition, just to make sure that we have the financial depth to be able to do so.

So we are committed to pursuing things in parallel when there's a compelling path to do so. Obviously, that's intended to maximize the potential benefit for patients as quickly as possible. And of course, there are also now other external factors like the IRA that makes it much harder to pursue a serial program where you just continuously add on indications at the back end. That just becomes pretty meaningless from a commercial point of view. So I think for both -- both for good reasons and for extraneous -- external reasons, we're going to pursue as a parallel approach as makes sense to us to do.

With regard to your second question, which -- or the second part of this, exactly which things will be included in that parallelized approach will depend on exactly what the data show. And I think you'll get more understanding of that when we are able to show then current data set in October. The trend suggests to us that there's rationale for pursuing multiple things, but best to look at the current data set and to provide the context for our vision and our strategy at that point in time.

We're obviously very deeply engaged in developing options around that. And it's just too early, though, to convey that until we can link it to data that you are able to see.

Okay. Great. And then just quickly on 5552, any framing you can provide around the updates we should expect at the Triple Meeting given there was some single-agent activity in the prior update, number of patients, duration of follow-up? Just broad strokes if you can.

Yes. Well, I think it's important to keep in mind that the goal that we have for RMC-5552 is to qualify it as a potential RAS companion inhibitor to be used in combination with RAS inhibitors and particularly in combination with our RAS(ON) inhibitors. So that's really what we've been doing, and we felt that we had the time to do this carefully and to do dose optimization, which is really what we've been doing, dose optimization and primarily felt a dose going forward that we can work with in combination with RAS(ON) inhibitors.

So that's what you'll see, is sort of more of that dose optimization. We don't currently have plans to pursue it as a single agent beyond getting to understand the dose and safety relationship, the dose tolerability relationship. And so really, you'll start to see activity -- most important activity data will come from the combination work in the future. We don't have yet today a plan to lay out for you about that.

Our last question comes from Ben Burnett of Stifel.

I wanted to just also ask about RMC-6236, the RAS MULTI program. I guess as you dose higher, will you -- are there plans to assess different dose schedules? Or will the focus really be on a single schedule like at different doses?

Yes. I think we've made that pretty clear for the last number of maybe 6 months that we're using a daily dosing schedule. That seems to be behaving well. We get good coverage over many hours after dosing, so essentially, pretty continuous coverage of the target. So it's not clear to us -- it certainly isn't clear why one might increase the frequency of dosing. And the only advantage of decreasing the frequency would be if we could somehow drive to higher exposure levels at peak and then balance that with some sort of tolerability benefit by allowing exposures to fall over the interval.

At the moment, we don't have explicit plans to evaluate those alternate kinds of schedules. We retain the flexibility to do so. We, of course, have a lot of experience with that from our RMC-4630 SHP2 inhibitor program, but we don't have any immediate plans or concrete plans to do so because the daily dosing is working out very well for us.

Okay. Okay. That's great. And if I could just ask one more follow-up on RMC-6236, recognizing that you recently provided a bit of an update last week, but do you have any more clarity as to whether or not we might get to see some patient data at that 400 mg dose level in either of the October updates?

Don't know.

No as in no patient data for 400 mg or no more clarity?

That was a don't know. I don't know.

(inaudible) clarity I think.

Yes, if the question was, well, can we provide more clarity, no. But I don't know the answer to the question whether or not there will be any 400-milligram patients. If we have evaluation data at the time that we do a data cut, then we'll include those data. I mean there's not -- we're not handpicking, which patients to include. But that cohort was just launched relatively recently, so I just think...

Yes, the screening is ongoing, so it's not entirely clear what -- how the timing of the dosing is going to sync up with the timing of the data cut, which is why we can't really answer your question. The answer is, hopefully, we'll have some early data, but I don't think we can guarantee that.

I'm showing no further questions at this time. I would now like to turn the conference back to Dr. Mark Goldsmith for closing remarks.

Thank you, operator, and thank you to everyone for participating today and for your continued support of Revolution Medicines.

This concludes today's conference call. You may now disconnect.