
Revolution Medicines: On Hold Pending A Lower Entry Point (NASDAQ:RVMD)
sanjeri
Shares of oncology concern Revolution Medicines, Inc. (NASDAQ:RVMD) have more than doubled since the market initially reacted negatively to a clinical update on lead asset RMC-6236 in October 2023. The company’s novel approach to treating cancer with its RAS(ON) inhibitors will be tested when RMC-6236 enters two registrational trials for pancreatic and lung cancer in 2H24. With plenty of upcoming catalysts, an operating runway into 2027, and listed as a potential takeover target by Wells Fargo, Revolution merited a revisit. An updated analysis follows in the paragraphs below.
Seeking Alpha
When we last looked at the company more than 14 months ago, it was ending a five-year collaboration with Sanofi and had recently executed a secondary offering. Its stock was trading in the low 20s and a small position was recommended based on its novel approach to treating cancer with its RAS(ON) inhibitors, buttressed by supportive early clinical returns.
As a reminder, Revolution Medicines, Inc. is a Redwood City, California clinical-stage precision oncology concern focused on the development of medications that inhibit frontier targets of renin-angiotensin system (RAS)-addicted cancers. The company is currently advancing three clinical programs – all novel RAS(ON) inhibitors – against solid tumor targets. Revolution was formed in 2014 and went public in 2020, raising net proceeds of $251.0 million at $17 per share. The shares trade around $40.00 a share, translating to an approximate market cap of $6.6 billion.
RAS Inhibition
RAS controls systemic body fluid circulation, but it is also present in some tumor microenvironments. In healthy patients, RAS acts like a light switch, toggling between “ON” and “OFF.” When ON, a RAS isoform protein sends signals that tell a cell to grow and divide. RAS mutated proteins rarely switch OFF, leading to uncontrolled cell growth. Once considered an “undruggable” target, therapies attempting to keep RAS permanently locked in the OFF position have been approved, beginning with Amgen’s (AMGN) KRAS G12C (OFF) inhibitor Lumakras (sotorasib) in 2021. By contrast, Revolution’s lead therapies aim to permanently disengage the ON switch.
The company has two types of RAS targeting compounds: the just-described RAS [ON] inhibitors, which aim to block the ON switch by inhibiting the active guanosine triphosphate-bound (or ON form of) RAS near the cancer mutation omphali (center points) and suppress the excessive signaling at its source, and RAS companion inhibitors, which suppress cooperating targets and pathways that sustain RAS-addicted cancers and are thus designed to be used in combination with other therapies to counter treatment resistance. Excessive RAS(ON) signaling accounts for ~30% of cancers, including ~60,000 new cases of lung cancer, ~75,000 new diagnoses of colorectal cancer, and ~53,000 new cases of pancreatic cancer in the U.S. annually. Owing to results in the clinic to date, the company’s focus has shifted almost exclusively to its RAS [ON] inhibitors.
May 2024 Company Presentation
Pipeline
RMC-6236. Revolution’s gaudy $6.22 billion market cap is largely attributable to the company’s lead program, RMC-6236, which is designed to inhibit the spectrum of RAS [ON] variants, including all three major RAS isoforms ((KRAS, NRAS, and HRAS)) found at mutation hotspot positions G12 (the most prevalent), G13, and Q61.
May 2024 Company Presentation
After demonstrating promise in human models in the preclinic, this once-daily, oral tri-complex RASMULTI inhibitor produced solid data across most KRAS G12 variants (referred to as ‘X’, meaning variants A, D, R, S, or V – not C) tumor types as a monotherapy in a 131-patient Phase 1/1b dose escalation study (RMC-6236-001). In 46 evaluable and previously treated pancreatic ductal adenocarcinoma (PDAC) patients, doses of RMC-6236 80mg and higher returned a partial response [PR] or stable disease [SD] in 40 patients (87%). Its objective response rate (ORR) of 20% and disease control rate (DCR) of 67% compared favorably to the often employed second-line (2L) combo chemotherapy of gemcitabine plus nab-paclitaxel (GnP; ORR 11%, DCR 56%). In 40 evaluable and previously treated non-small cell lung cancer (NSCLC) patients, it produced one complete response (CR), 14 PRs, and 19 SDs for an ORR of 38% and a DCR of 85%, comparing favorably to standard of care chemotherapy docetaxel (ORR 13%, DCR 60%). As for safety, there was one (of 131) Grade 4 treatment-related adverse event (TRAE), with rash, nausea, diarrhea, and vomiting the most common side effects. An additional update to this ongoing study, which will include durability data, is anticipated in 2H24.
That said, the market, harboring high expectations, initially responded as if it had a TRAE to the seemingly favorable data, selling shares of RVMD down 40% to $18.35 over a two-day period in October 2023.
Based on these results, Revolution is aiming to initiate two registrational trials for RMC-6236 by YE24. One trial will assess the therapy in 500+ previously treated PDAC patients (of which ~85% will harbor KRAS G12X variants) against chemotherapy agents GnP or Folfirinox with progression free survival and overall survival the proposed primary endpoints. The other is a similar study except for the patient size (400+), the indication (NSCLC), the comparator (docetaxel), and a KRAS G12X population that will include a small but meaningful percentage of KRAS G12C patients.
RMC-6236 is also being assessed in combination with Merck’s (MRK) PD-1 inhibitor Keytruda (pembrolizumab) with or without chemotherapy in NSCLC patients as a first-line treatment in a Phase 1 trial (RMC-LUNG-101) with Revolution planning another early-stage chemo-combo study for 1L PDAC. Initial data from RMC-LUNG-101 are anticipated in 2H24.
RMC-6291. Whereas RMC-6236 targets a wide range of KRAS G12 variants, Revolution’s RMC-6291 program is focused on selective KRAS G12C [ON] inhibition to avoid wild-type toxicity. Approximately 29,000 KRAS G12C – a hallmark of cigarette smoke – cancers are diagnosed in the U.S. every year, with ~76% lung cancers and ~18% colorectal. First-generation KRAS G12C inhibitors such as Bristol-Myers Squibb’s (BMY) Krazati (adagrasib) target the (OFF) switch. After demonstrating superiority to Krazati in murine models, RMC-6236 entered the clinic in a dose-expansion Phase 1/1b study on previously treated KRAS G12C solid tumors (RMC-6291-001) with very encouraging initial returns.
May 2024 Company Presentation
In 17 evaluable NSCLC patients, RMC-6291 achieved a 47% ORR and a 100% DCR. In 20 evaluable colorectal cancer [CRC] patients, it produced a 40% ORR and an 80% DCR. The trial is still dosing. It is also undergoing evaluation in the RMC-LUNG-101 combination study, with its initial data due in 1H25. RMC-6291 is also being assessed in combination with RMC-6236 for the treatment of solid tumors.
RMC-9805. The company’s other selective RAS(ON) clinical program is RMC-9805, which targets KRAS G12D [ON] cancers, numbering ~61,000 annually in the U.S., of which PDAC, CRC, and NSCLC comprise 89%. It is undergoing a Phase 1 dose-finding monotherapy study and will be evaluated in combination with RMC-6236, both in solid tumors. Initial data from the former are expected in 1H25 and the latter in 2H24.
May 2024 Company Presentation
RMC-5552. Revolution does have another clinical asset, RAS companion inhibitor RMC-5552, which is designed to selectively block mTORC1/4EBP1 while suppressing resistance to RAS inhibition through obstruction of the cooperating mTORC1 pathway signaling. The IV administered candidate is being assessed as a monotherapy against multiple solid tumors in a Phase 1/1b trial, with a DCR of 78% in 36 evaluable patients to date. That said, this therapy does not appear to be a priority at the present for management – likely due to bandwidth constraints. The same can be said for the companion inhibitor RMC-4630, which was returned by Sanofi (SNY) in June 2023; as well as RAS(ON) mutant-selective inhibitors RMC-5127 (G12V), RMC-0708 (Q61H), and RMC-8839 (G13C).
With its assets currently unencumbered, the company expects to market them domestically while seeking out commercial partnerships internationally, assuming approval(s). This wholly owned portfolio is likely a contributing factor in Wells Fargo’s decision to put Revolution on its list of potential takeover targets the week of May 20th.
Balance Sheet & Analyst Commentary:
In November 2023, the company essentially acquired ~$1.1 billion of cash and securities from the balance sheet of failed “global drug buyers club” concern EQRx by issuing it 54.8 million shares of RVMD. The purchase was agreed on July 31, 2023, and closed on November 9, 2023. Owing to the timing of the market’s reaction to the RMC-6236 data in October, Revolution ended up issuing ~18 million more shares than it had planned a month prior. Either way, as of March 31, 2024, the company held cash and marketable securities of $1.7 billion, providing it an operating cash runway into 2027.
Since Bank of America’s upgrade in January 2024, Street analysts have been unanimously positive on Revolution, featuring eight buy and four outperform ratings and a median price objective of $45.
Verdict:
As for competition, the company lists no fewer than 20 KRAS G12C (OFF) programs in the clinic and four more targeting KRAS G12D. Besides for BridgeBio Pharma (BBIO), which has a selective KRAS G12C [ON] program, Revolution is really the only biopharmaceutical concern targeting those proteins with ON therapies. The space is hot because the opportunity in solid tumors is substantial. I provided an update on BridgeBio Pharma earlier this week.
As such, shares of RVMD have essentially doubled since the visceral reaction to the RMC-6236 clinical update seven months ago. That response was a function of the stock being priced for perfection. With a market cap of ~$4.5 billion net of cash and wholly positive Street analysts’ median price target less than 20% away, Revolution’s stock is close to achieving priced-for-perfection status again, save a suitor that thinks differently. And with RMC-6236 durability data a potential fly in the ointment, now is a probably good time to take at least some profits and await a better re-entry point if currently holding Revolution Medicines, Inc. shares.