Revolution Medicines, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed February 27, 2023. This is an annual report, not a standalone fourth-quarter report. Revolution Medicines is a clinical-stage precision oncology company developing therapies for RAS-driven cancers; it had no products approved for sale and no product-sale revenue.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Collaboration revenue | $35.4 million | $29.4 million |
| Research and development expense | $253.1 million | $186.9 million |
| General and administrative expense | $40.6 million | $30.5 million |
| Total operating expenses | $293.7 million | $217.4 million |
| Loss from operations | $(258.3) million | $(188.0) million |
| Net loss | $(248.7) million | $(187.1) million |
| Net loss per share, basic and diluted | $(3.08) | $(2.57) |
| Cash used in operating activities | $(224.4) million | $(147.2) million |
| Cash, cash equivalents and marketable securities, at year-end | $644.9 million | $577.1 million |
Collaboration revenue was entirely associated with the Sanofi SHP2 agreement. The company reported $9.2 million of interest income in 2022, versus $0.9 million in 2021. No product-sales margin is applicable; the company remained loss-making. The filing reports no material financial debt; year-end liabilities included $64.2 million of operating lease liabilities. Current assets were $660.2 million against current liabilities of $62.0 million.
Changes versus FY2021
- Revenue rose 20%, largely due to a $3.0 million cumulative catch-up adjustment under the Sanofi agreement, partly offset by lower reimbursable R&D costs.
- R&D expense increased 35%, reflecting pipeline and clinical-trial investment, including RMC-6236 and RMC-6291, preclinical work, hiring and facilities costs.
- G&A expense increased 33%, mainly from higher personnel and stock-based compensation costs.
- Net loss widened by $61.6 million, while operating cash use increased by $77.2 million.
- Cash and marketable securities increased by $67.8 million, supported by financing. The company raised $248.1 million net in a July 2022 public offering and $49.9 million net through its ATM program.
Business outlook, developments and risks
- Management said year-end cash, cash equivalents and marketable securities were expected to fund planned operations for at least 12 months following the report date. It also expects substantial additional financing will be needed to advance development and prepare for potential commercialization.
- Sanofi gave notice in December 2022 that it would terminate the SHP2 collaboration, effective June 2023. After termination, Revolution Medicines expected to regain global rights and decision-making for RMC-4630, but lose Sanofi reimbursement, milestone and royalty benefits. Through 2022, the company had received $176.9 million from Sanofi, including upfront payment and R&D reimbursements. Transition execution and the resulting funding needs are important uncertainties.
- RMC-6236 was in Phase 1/1b dose escalation. In a February 17, 2023 data cut, 12 efficacy-evaluable patients with KRAS G12X NSCLC or pancreatic cancer treated at doses of at least 40 mg had stable disease or better; 10 had some tumor reduction. One patient had an unconfirmed partial response. A related grade 4 bowel perforation was reported. These are early, limited data and are not proof of efficacy.
- RMC-6291 was in Phase 1/1b dose escalation; RMC-9805 remained in IND-enabling development. The company’s stated 2023 expectations included further RMC-6236 single-agent data in midyear, preliminary RMC-6291 profile evidence in the second half, first-patient dosing for RMC-9805 around midyear, and RMC-4630-03 topline data in the second half. These are management expectations, not guarantees.
- RMC-5552 Phase 1 interim data through December 19, 2022 included a confirmed partial response and a 71% disease-control rate among efficacy-evaluable patients treated at majority doses of 6 or 8 mg weekly; the company said additional dose evaluation was ongoing.
- Principal risks include clinical failure or delay, uncertain translation of early or preclinical results, patient-enrollment and safety issues, competition, reliance on contract manufacturers and other third parties, intellectual-property challenges, and the need for additional capital. The company also cited possible trial and supply disruptions from COVID-19 and the Russia–Ukraine conflict.
- The independent auditor issued an unqualified opinion on the financial statements and internal control over financial reporting; management and the auditor concluded controls were effective at year-end. Revenue recognition under the Sanofi agreement was identified as a critical audit matter because it depended on estimates of costs and progress toward completion.
Important facts for investors to verify
- Current cash runway and forecast cash needs, especially after Sanofi reimbursement ended and as clinical programs expand.
- Updated clinical data, patient numbers, follow-up duration, confirmed responses, safety findings and dose selection for RMC-6236, RMC-6291 and RMC-5552.
- Whether the RMC-4630 rights, data, manufacturing, regulatory and patent responsibilities transferred smoothly from Sanofi, and the ongoing scope of any surviving obligations.
- Progress against stated 2023 clinical milestones, and whether interim or topline findings change with longer follow-up and final data review.
- Potential dilution from future equity financing, stock-based compensation and outstanding equity awards; common shares outstanding were 90.4 million at year-end 2022.