Revolution Medicines, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; financial statements are unaudited. Revolution Medicines is a clinical-stage precision oncology company developing therapies for RAS-driven cancers. It has no approved products and has not generated product-sales revenue.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Collaboration revenue | $10.1 million | $11.5 million; down 12% |
| Research and development expense | $40.9 million | $27.5 million; up 49% |
| General and administrative expense | $6.7 million | $5.2 million; up 29% |
| Total operating expenses | $47.5 million | $32.6 million |
| Loss from operations | $37.4 million | $21.1 million |
| Net loss | $37.2 million | $19.5 million |
| Net loss per share, basic and diluted | $0.53 | $0.74; weighted-average shares increased to 70.4 million from 29.3 million |
| Cash used in operating activities | $37.2 million | $28.0 million |
Collaboration revenue came from the Sanofi SHP2 agreement. The filing does not present a separate gross margin; it reports collaboration revenue and operating expenses. Interest income was $0.2 million, down from $0.9 million, primarily due to lower interest rates. No income-tax benefit was recorded, compared with $0.7 million in Q1 2020.
At March 31, 2021, cash and cash equivalents were $351.6 million and marketable securities were $330.0 million, totaling $681.6 million in cash, cash equivalents and marketable securities. Total current assets were $697.4 million and current liabilities were $43.8 million. Total liabilities were $89.1 million. The company reported no conventional borrowings; operating lease liabilities were $32.0 million, with $45.6 million of undiscounted lease payments. Management said available cash and securities should fund planned operations for at least 12 months after the financial statements’ issuance.
Q1 financing provided $282.3 million in cash, principally from a February 2021 follow-on offering that generated $281.1 million in net proceeds. Common shares outstanding rose to 73.4 million from 66.6 million at year-end 2020. Stockholders’ equity was $722.6 million; accumulated deficit was $302.7 million.
Material changes and business developments
- Net loss increased by $17.7 million year over year, mainly as R&D expense rose by $13.4 million and G&A expense by $1.5 million, while collaboration revenue declined by $1.4 million.
- Management attributed the R&D increase primarily to $10.5 million of higher third-party preclinical costs, plus increased employee-related costs and stock-based compensation. Lower manufacturing costs for the SHP2 program primarily drove the revenue decline.
- Management expects expenses and operating losses to increase as the company advances clinical and preclinical programs, expands staffing and facilities, and operates as a public company. No specific financial forecast or profitability timeline is provided.
- The pipeline includes RMC-4630, an SHP2 inhibitor in a multi-cohort Phase 1/2 program; RMC-5552, an mTORC1 inhibitor whose first patient was dosed in April 2021; and preclinical RAS(ON) and SOS1 programs.
Outlook, risks and unusual items
- Management expected preliminary RMC-4630 plus cobimetinib data in KRAS-mutant colorectal cancer in 2022, initial tolerability and pharmacokinetic data for the osimertinib combination in the second half of 2021, and initial single-agent RMC-5552 data in 2022. The company planned to submit an IND for RMC-5845 in the second half of 2021 and INDs for RMC-6291 and RMC-6236 in the first half of 2022. These are expectations, not guarantees.
- Overlapping on-pathway toxicities with RMC-4630 plus osimertinib had been observed; the company continued enrollment to assess safety and tolerability. Clinical outcomes remain uncertain, and early-stage results may not predict later results.
- COVID-19 had temporarily stopped or delayed enrollment at some RMC-4630 clinical sites; further effects on enrollment, monitoring, data collection, suppliers and trial timing remained possible. Management reported no material COVID-19 impact on the Q1 financial statements.
- The company depends on Sanofi for its SHP2 collaboration and associated reimbursements. Sanofi has substantial development control and may terminate the agreement for convenience, which could remove funding and affect RMC-4630 development.
- The company has incurred losses since inception, expects further losses, and may need substantial additional financing. Future funding availability and terms are uncertain. It also relies on third parties for clinical trials and manufacturing.
- Management reported no legal proceedings believed likely to have a material adverse effect, no off-balance-sheet arrangements, and effective disclosure controls as of March 31, 2021.
Important facts for investors to verify
- Progress, safety findings, enrollment and data timing for RMC-4630 combinations, particularly the observed overlapping toxicities with osimertinib.
- Whether Sanofi continues the collaboration, funds agreed SHP2 activities and advances the program under the agreement’s governance and termination provisions.
- Cash burn relative to the $681.6 million liquidity balance, the stated runway, and potential need for additional capital or further share issuance.
- Whether planned IND submissions and clinical-data milestones are achieved, and how preclinical RAS(ON) programs translate into clinical development.
- Potential effects of COVID-19, clinical-site enrollment, third-party manufacturing, and competition on trial timelines and costs.