Revolution Medicines, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; the provided text does not present standalone fourth-quarter results. Revolution Medicines is a clinical-stage oncology company and had no approved products or product-sales revenue.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Collaboration revenue | $29.4 million | $43.0 million |
| Research and development expense | $186.9 million | $132.3 million |
| General and administrative expense | $30.5 million | $21.4 million |
| Operating loss | $188.0 million | $110.7 million |
| Net loss | $187.1 million | $108.2 million |
| Net loss per share, basic and diluted | $2.57 | $2.01 |
| Cash used in operating activities | $147.2 million | $100.1 million |
| Cash, cash equivalents and marketable securities at year-end | $577.1 million | $440.7 million |
Revenue came from the Sanofi collaboration, not product sales. The company reported no meaningful debt burden in the provided figures; interest expense was less than $0.1 million in FY2021. Current assets were $589.8 million and current liabilities were $60.4 million at year-end. Management said available cash, cash equivalents and marketable securities were expected to fund planned operations for at least 12 months following the report date. The company nevertheless expects to need substantial additional financing.
Changes versus the prior year
- Revenue fell 32%, primarily because of an $8.5 million cumulative catch-up reduction following changes to the Sanofi development plan and lower reimbursed manufacturing costs.
- R&D expense rose 41%, driven mainly by higher preclinical program costs, including chemistry, material sourcing and manufacturing, as well as employee and facility costs.
- G&A expense rose 42%, principally reflecting higher stock-based compensation, staffing and insurance costs.
- Net loss widened by $78.9 million, while operating cash use increased by $47.1 million.
- Cash, cash equivalents and marketable securities increased by $136.4 million, supported by a February 2021 public offering and ATM sales. The February offering generated approximately $281.1 million in net proceeds; ATM sales generated $10.1 million net.
Outlook, pipeline and key risks
- Development plans: The company planned to submit IND applications for RMC-6236 and RMC-6291 in the first half of 2022, with initial clinical evidence targeted for 2023. IND submissions were planned for RMC-9805 in the first half of 2023 and RMC-8839 in the second half of 2023. These are forward-looking targets, not achieved milestones.
- Clinical updates: RMC-4630 was being evaluated in Phase 1/2 studies, including a company-sponsored Phase 2 combination study with sotorasib; enrollment was expected to complete in the second half of 2022. For RMC-5552, management reported preliminary activity in a small Phase 1 cohort as of January 7, 2022: all four efficacy-evaluable patients receiving 6 mg weekly had disease control, including one confirmed partial response. These early results are not conclusive.
- Sanofi collaboration: Sanofi reimburses substantially all approved SHP2 research and development costs, subject to stated exceptions, and the agreement includes potential milestone payments of up to $520 million, equal U.S. profit/loss sharing, and ex-U.S. royalties. Sanofi has substantial program and commercialization control and may terminate for convenience under specified notice provisions.
- Funding and dilution: The company has incurred losses since inception, expects further losses and R&D spending, and has no product-sales revenue. It may need additional capital; equity financing could dilute stockholders. Its ATM program authorized up to $250 million in gross sales, of which $10.4 million had been sold by year-end.
- Other risks and contingencies: Key risks include clinical and regulatory failure or delays, uncertainty in translating preclinical results, patient enrollment and COVID-19 disruption, reliance on third-party manufacturers and research organizations, competition, intellectual-property challenges, and dependence on Sanofi for SHP2 development. Management reported no material pending litigation and no off-balance-sheet arrangements. Lease liabilities totaled $66.6 million, with undiscounted future lease payments of $97.1 million.
- Audit and controls: The auditor issued an unqualified opinion on the financial statements and internal control over financial reporting. Revenue recognition under the Sanofi agreement was identified as a critical audit matter because it relies on estimates of costs incurred and costs to complete.
Important facts for investors to verify
- Whether the planned IND filings and clinical data milestones were achieved, and how later trial results compare with preliminary findings.
- How R&D spending, operating cash use and available liquidity have evolved since December 31, 2021, including the timing and terms of any further financing.
- The effect of the Sanofi agreement’s reimbursement provisions, decision rights, potential termination, milestones and profit/royalty economics on future cash flows and program control.
- Whether the $8.5 million revenue catch-up adjustment and estimates underlying collaboration revenue are fully understood in light of the filing’s critical audit matter.
- Potential dilution from outstanding equity awards and future ATM or other equity issuance.