Revolution Medicines, Inc. (NASDAQ:RVMD) Q1 2024 Earnings Call Transcript

Revolution Medicines, Inc. (NASDAQ:RVMD) Q1 2024 Earnings Call Transcript May 8, 2024

Revolution Medicines, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and thank you for standing by. Welcome to Revolution Medicine’s First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there’ll be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Erin Graves, Senior Director of Corporate Communications and Investor Relations, please go ahead.

Erin Graves: Thank you, and welcome, everyone, to the first quarter 2024 earnings call. Joining me on today’s call are Dr. Mark Goldsmith, Revolution Medicine’s Chairman and Chief Executive Officer; and Jack Anders, our Chief Financial Officer.; Dr. Steve Kelsey, our President of R&D will also 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 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 or update any forward-looking statements.

I encourage you to review the legal disclaimer in our corporate presentation and our 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 Medicine’s Chairman and Chief Executive Officer. Mark?

Dr. Mark Goldsmith: Thanks, Erin. It’s good to be with you this afternoon and to provide an update on our first quarter 2024 earnings. On today’s call, I’ll provide a brief update on our company progress, and Jack Anders will provide highlights of our financial results before we open the line for questions. We began 2024 with ambitious goals for our pioneering RAS(ON) inhibitor pipeline. We provided a roadmap outlining our three strategic priorities for the year and anticipate a catalyst rich second half of the year that has the potential to be transformative for Revolution Medicines. Our highest priority in 2024 is to advance RMC-6236 into its first pivotal monotherapy trials in major cancers driven by oncogenic RAS variants.

In the second half of the year, we expect to share updated clinical data from the ongoing RMC-6236 first in human study from each of the pancreatic ductal adenocarcinoma and non-small cell lung cancer cohorts, including durability data. Elements of these data are part of the regulatory packages supporting engagement with the FDA to determine a go forward dose and to obtain feedback on pivotal trial designs prior to initiating each of these studies. We are currently setting the operational foundation to enable initiating these global randomized controlled registrational trials, comparing RMC-6236 monotherapy to standard of care treatments in the second half of this year. We anticipate that the first of these trials to launch will evaluate RMC-6236 as second line treatment for patients with advanced pancreatic cancer and that we will disclose the updated clinical data supporting this trial near the study launch.

Similarly, we expect that the second trial to launch will evaluate RMC-6236 as second line treatment for patients with advanced non-small cell lung cancer and that we will disclose the updated clinical data supporting this trial near its launch. We believe that initiating these trials will represent an exciting step forward for RMC-6236 on behalf of patients with these common RAS mutated cancers, and these major steps will transition Revolution Medicines to an important new stage of company maturity. Our second development priority is focused on expanding the reach of RMC-6236 beyond G12X mutations into different RAS genotypes and tumor types. This work was amplified recently with an oral presentation at the AACR Annual Meeting and three original scientific publications in Nature and Cancer Discovery that describe the mechanistic foundations of this groundbreaking RAS(ON) multi-selective inhibitor and illustrate its compelling clinical potential.

At the meeting, we also presented four clinical cases, which, while anecdotal, showed the potential for RMC-6236 to drive deep anti-tumor responses at tolerated doses across a wide range of oncogenic RAS genotypes beyond KRAS G12X variance we have described previously, including the NRAS isoform and Oncogenic G13X and Q61X variants that drive cancers or RAS mediated drug resistance. A further note, two of the patients described at the AACR, one with advanced pancreatic cancer and one with advanced melanoma, experienced complete responses on treatment with RMC-6236, both having progressed through prior treatment. Although clearly complete responses to RMC-6236 are much less common than partial responses or absence of an objective response by RECIST criteria, observation of complete responses in lung, pancreatic, and melanoma patients signifies the potential power of targeting RAS addiction with this compound and further motivates us to seek to expand the reach of RMC-6236 into earlier lines of treatment.

In some instances, we anticipate that first line treatment with RMC-6236 will be based on a combination approach. This year, we are studying several key combination regimens to determine feasibility and to define options for first line registration trials with drug combinations. A high priority combination is the RAS(ON) inhibitor doublet of RMC-6236 plus RMC-6291, our RAS(ON) G12C mutant-selective inhibitor in patients with RAS G12C solid tumors. A study of this doublet is ongoing, and we anticipate reporting initial clinical data for the combination of RMC-6236 and 6291 in the second half of the year. A second combination study is evaluating RMC-6236 plus pembrolizumab with or without chemotherapy in patients with advanced RAS mutated non-small cell lung cancer.

Since pembro is part of most first line standard of care regimens in this indication, we anticipate providing initial clinical data for this combination in the second half of the year. We’re also happy to share today that we’ve initiated two new combination studies evaluating RMC-6236 with current standard of care regimens in GI cancers. The first is evaluating RMC-6236 in combination with standard of care chemotherapy and first line treatment of patients with pancreatic cancer, and the second is evaluating RMC-6236 with chemotherapy and first line treatment for colorectal cancer. These two additional studies will provide us with important insights into potential first line registrational paths as a crucial component of our development vision for RMC-6236.

Our third priority for the year is to qualify our first two RAS(ON) mutant-selective inhibitors in the clinic, RMC-6291, our G12C selective inhibitor, and RMC-9805, our G12D selective inhibitor for late stage development. While we continue first in human monotherapy studies for both of these compounds, we are initiating combination studies to explore opportunities in early line treatment settings. The first in human study evaluating RMC-6291 has yielded encouraging initial clinical data in second line monotherapy treatment of patients with KRAS G12C non-small cell lung cancer, including those previously treated with an approved KRAS G12C(OFF) inhibitor and in patients with KRAS G12C colorectal cancer who had not been previously treated with a RAS(ON) inhibitor.

At AACR, we presented data from preclinical models in which the RAS(ON) inhibitor doublet, RMC-6236 plus RMC-6291 demonstrated significant improvement in response rates and durability relative to either monotherapy. These encouraging data reinforce our hypothesis that a RAS(ON) doublet, combining a RAS(ON) multi-selective inhibitor with a RAS(ON) mutant-selective inhibitor may deliver meaningful benefit to patients with RAS mutant cancers. As mentioned, an initial clinical study of this combination is ongoing. A clinical study of the combination of RMC-6291 with pembrolizumab is also ongoing, and we anticipate disclosing initial data for RMC-6291 with pembrolizumab in the first half of 2025. We also anticipate evaluating the triplet regimen comprising the RAS(ON) inhibitor doublet, RMC-6236 plus RMC-6291 with pembrolizumab for patients with RAS mutated non-small cell lung cancer in the first line setting.

If exploration of the triplet proves supportive, it could open the path to pursuing late stage development of a chemotherapy free first line treatment regimen for patients with RAS mutant non-small cell lung cancer. Regarding RMC-9805, the first RAS(ON) G12D selective inhibitor, we presented preclinical data in the new drugs on the Horizon session at AACR, showing that RMC-9805 induced deep and durable regressions in preclinical models of several KRAS G12D tumor types. As disclosed earlier this year, oral bioavailability in patients has been confirmed, and we have cleared several dose levels with good tolerability and no dose limiting toxicities reported thus far. We expect to share initial safety, tolerability, and antitumor activity data in the second half of 2024.

We are also planning for our second RAS(ON) doublet combination study evaluating RMC-6236 plus RMC-9805 in patients with advanced RAS G12D mutated cancers. We also anticipate setting RMC-9805 in combination with other standard of care treatments for RAS G12D tumors. Overall, we continue pursuing our ambitious plans covering a rich set of potential opportunities for the goal of maximizing the clinical impact of our RAS(ON) inhibitors in monotherapy and combination treatments for patients living with RAS addicted cancers. In the second half of the year, we anticipate launching our first registrational studies of RMC-6236 for second line treatment in two major RAS driven cancers, qualifying potential paths forward for evaluating RMC-6236 in first line treatments for these tumors and establishing potential opportunities for advancing our first two clinical RAS(ON) mutant-selective inhibitors.

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

Jack Anders: Thank you, Mark. We ended the first quarter of 2024 with $1.7 billion in cash and investments. This compares to $1.85 billion at the end of 2023. The decrease in cash and investments for the quarter was primarily driven by net loss plus a $50.9 million decrease in accounts payable and accrued liabilities. Please note that we saw some lumpiness in the timing of expenses and the related cash payments, which caused a onetime increase in accounts payable and accrued liabilities of $56.7 million during the fourth quarter of 2023. This normalized by the end of the first quarter of 2024, resulting in anticipated cash payments and a corresponding decrease in accounts payable and accrued liabilities. Turning to expenses.

R&D expenses for the first quarter of 2024 were $118.0 million compared to $68.9 million for the first quarter of 2023. The increase in R&D expenses was primarily due to clinical trial expenses and related manufacturing expenses for our first wave of RAS(ON) inhibitors as well as an increase in personnel-related expenses related to additional headcount and an increase in stock-based compensation. G&A expenses for the first quarter of 2024 were $22.8 million compared to $13.2 million for the first quarter of 2023. The increase in G&A expenses was primarily due to an increase in personnel related expenses related to additional headcount and an increase in stock-based compensation. Net loss for the first quarter of 2024 was $116.0 million or $0.70 per share.

We are reiterating our 2024 financial guidance and expect projected full year 2024 GAAP net loss to be between $480 million and $520 million which includes estimated noncash stock-based compensation expense of between $70 million and $80 million dollars. And with that, I’ll turn the call back over to Mark.

Dr. Mark Goldsmith: Thank you, Jack. Revolution Medicines is off to a strong start for the year. We are well capitalized and remain focused on delivering key data and actions to advance RMC-6236 into its first registrational trials, while qualifying a range of potential opportunities, extending the reach of our RAS(ON) Inhibitors into earlier lines of treatment for patients living with RAS addicted cancers. Our work in progress would not be possible without the support of our patients, clinical investigators, scientific and business collaborators, advisors and shareholders and the tireless efforts of RevMed employees on behalf of patients. This concludes our prepared remarks for today, and I’ll now turn the call over to the operator for the Q&A session.

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Q&A Session

Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from Marc Frahm with TD Cowen. Please go ahead.

Marc Frahm: Maybe on pancreatic cancer for 6236, I guess, what questions are you still looking to find answers to on the to finalize that design for the second line? Is it just regulatory feedback that you need or is there still clinical data that you’re looking to gather to know exactly what you want to ask regulators? And then thinking forward to first line, just is it really dependent upon combinations because it seems to be how you’re talking about it or might monotherapy also ultimately get developed in the first line?

Dr. Steve Kelsey: Thanks, Mark. Appreciate your questions. To the first question of time, what’s driving the timing for the pancreatic cancer study, it basically is the same as the issues we’ve identified before. We need to come to agreement with the FDA on a dose and as well as on the trial design. So, I think those are first half of the year events. We’re in May. So, we’re still in the first half of the year, and we’ll get those done. And then in the second half of the year, we’ll likely move forward and provide the data that we’ve said we would provide. On the question about first line study, I think you asked whether we would wait for the results of the second line monotherapy pivotal trial before initiating the first line or no?

Marc Frahm: Yes. No, it seems like you’re very focused on kind of combinations and not opening up the first line opportunity. Is that really the main path forward in first line in your mind or is monotherapy also on the table for first line?

Dr. Steve Kelsey: Yes, I don’t think we know yet. I think as we’ve said before, we want to qualify what the options are. We know what the option would be for monotherapy. It would be monotherapy, but we don’t know what the options are for chemotherapy. We need to evaluate that from a safety point of view. So that’s why doing that exploratory work is very important. And once we know that, we’ll be able to decide what kind of trial is most appropriate. Is it a two-arm trial? Is it a three-arm trial? Are we evaluating both of those paths or just one of them compared to standard of care? We don’t know yet.

Operator: Our next question comes from Michael Schmidt with Guggenheim Securities. Please go ahead.

Michael Schmidt: On RMC-6236, I think we’ve recently seen the announcement from Bristol that the KRYSTAL 12 trial met its primary endpoint in second line lung cancer setting and we’ll probably get a few additional Phase 3 readouts from other KRAS G12C inhibitors in the coming year or so. And yes, I was just wondering how that potentially increased use down the road of those, G12C and those might impact your study or perhaps enrollment? Do you think it might be biased in any way away from KRAS G12C patients in your study, in your planned study and or may it affect your trial design at all?

Dr. Mark Goldsmith: Yes. Hi, Michael. Thanks for your question. I think it depends on what indication you’re talking about. In pancreatic cancer, it won’t have any impact at all because G12C represents such a small subpopulation and I don’t know that they’re even seeking approval in that indication, but it wouldn’t make much difference. And then in lung cancer, obviously, roughly 12% of non-small cell lung cancer is KRAS G12C and another 13% are other KRAS G12 mutations and then there’s another 5% or so beyond that that are other mutations. So that is a significant population. It’s already a crowded space from patients’ perspective. hey have access to two approved drugs today. They might have access to two approved drugs tomorrow and then maybe a few more that will come after that potentially, we don’t know for sure.

So, patients do have options today and it’s very credible for them to consider one of the approved drugs instead of entering a registration trial. I think we’ll try to deal with that, in some form in the design of the trial, but ultimately, if to the extent that G12C patients are eligible for that population, we’ll get what we’ll get. And I don’t think it will necessarily affect the overall outcome because we do expect that RMC-26236 would be active on G12C just as it’s active on the others, although we’ve not reported any clinical data on that, but pre-clinically that’s the case. So, we’ll get what we get. Obviously, the most important thing here is offering a potential treatment for patients without G12C, the patients that have non-G12C mutations.

That’s really the main driver for proceeding, but we’re interested in G12C and we’ll get them if we can get them.

Michael Schmidt: And then a specific question on your press release, I think you’re guiding to presenting initial data from the 6236 pembrolizumab combination in the second half. And I think I was just wondering is that specifically in first line lung cancer patients or is that in late stage patients?

Dr. Mark Goldsmith: Yes. Thanks for the question. We’re just handing microphone over to Steve. There we go.

Dr. Steve Kelsey: I’ll do with the question. The study evolves. The initial safety, even though first line patients are not precluded from the study. Most of the initial safety data will probably not be in the first line space to be completely honest with you. But as the safety emerges then the study will increasingly start to focus on the first line patients. How that reads into what we will actually report or disclose at any given time and at any given forum, I think is subject to some further discussion when we get closer to the event. But if your question is largely about how enabling will the data be for moving the program forward? I think that from our perspective, it’s likely to be extremely compelling and conclusive in that respect.

Dr. Mark Goldsmith: Largely because the most important question we’re asking there is a safety question.

Dr. Steve Kelsey: Correct. It’s not really an efficacy driven proof of concept at this stage. It’s more of a can you combine with pembrolizumab full stop. And I don’t think that the number of prior therapies or even really the disease of interest is going to determine that. Having said that, obviously, for obvious reasons, the actual combinations are largely restricted to patients with lung cancer.

Operator: Our next question comes from Eric Joseph with JPMorgan. Please go ahead.

Eric Joseph: Actually, just really wanted to pick up on the last point you made there, Steve. Appreciating sort of what you’re looking forward — what you’re looking for really focusing on establishing safety with pembro plus RMC-6236. I wonder whether in your regulatory interactions over your planned second line trials in non-small cell lung cancer, you had the opportunity to discuss first line development. We’ve seen that Merck is going straight into frontline with their G12C inhibitor plus pembro unlike 25 patients worth of data. I wonder whether you might have similar optionality to pursue a frontline trial and perhaps pivot from the second line strategy earlier than expected?