Good day and thank you for standing by. Welcome to the Revolution Medicines Third Quarter 2022 Earnings Webcast. [Operator Instructions] I would now like to hand the conference over to Peg Horn, Revolution Medicine's Chief Operating Officer for opening remarks. Peg, you may begin..

Thank you and welcome, everyone, to our third-quarter earnings call. Joining me on today's call are Dr. Mark Goldsmith, Revolution Medicine's Chairman and Chief Executive Officer; Dr. Steve Kelsey, the company's President, Research and Development; and Jack Anders, our Chief Financial Officer.

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 constitutes 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 slide of our corporate presentation or the 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 Medicines Chairman and Chief Executive Officer.

Mark?.

to provide top-line data from the 463003 study of RMC-4630 plus sotorasib in the second half of '23 and to disclose additional evidence of single-agent activity for RMC-5552 in 2023.

In summary, we remain deeply committed to our science-driven approach to treating patients with RAS-addicted cancers and our development-stage pipeline and research efforts have entered an exciting and important phase.

Our first wave of RAS(ON) inhibitors which includes 3 distinct and highly differentiated drug candidates has advanced significantly with patients now being dosed with RMC-6236 or 6291 and RMC-9805, continuing its progress towards the clinic.

Our differentiated RAS Companion inhibitors RMC-4630 and 5552 have each shown evidence of single-agent clinical activity along the path towards strategic combinations with direct RAS inhibitors and initial clinical evidence has now emerged in support of RMC-4630 as a RAS Companion inhibitor used in combination with a direct RAS inhibitor.

As we intensify efforts to progress these assets to significant milestones in the coming period, we also continue to make a significant investment in pipeline expansion activities based on our productive RAS innovation engine.

Building on the strong company momentum, I'll now turn to Jack Anders, our Chief Financial Officer, to provide a financial update.

Jack?.

Thank you, Mark. We strengthened our balance sheet in the quarter with the upsized public offering of common stock, raising gross proceeds of $265 million. Net proceeds were approximately $248 million, deducting [indiscernible], commissions and estimated offering expenses.

Our ending cash and investment balance as of September 30, 2022, was $655 million which is expected to fund planned operations through 2024. Revenue from our collaboration agreement with Sanofi was $3.4 million in the third quarter of 2022 compared to $1.1 million in the prior year period.

During the third quarter of 2022, the company recorded a non-cash GAAP accounting adjustment that reduced collaboration revenue by $4.6 million.

This non-cash revenue adjustment was due to changes to the company's estimates of the accounting transaction price and estimated percentage of completion of work performed to date under the agreement which resulted in a cumulative catch-up adjustment that reduced collaboration revenue.

We also had a similar catch-up adjustment related to revised estimates during the prior year quarter which reduced collaboration revenue by $8.5 million for that prior year period. Total operating expenses for the third quarter of 2022 were $79.9 million and increased by 47% over the prior year period.

The increase in operating expenses was primarily driven by an increase in RMC-6236 and RMC-6291 costs as a result of commencing clinical trials during the year as well as an increase in personnel-related expenses related to additional headcount. Net loss for the third quarter of 2022 was $73.3 million or $0.87 per share.

We are reiterating our financial guidance and continue to expect full-year 2022 GAAP net loss to be between $260 million and $280 million, with noncash stock-based compensation expense expected to be between $30 million and $35 million. That concludes the financial update and I'll now turn the call back over to Mark..

Thanks, Jack. Our goal at Revolution Medicines is to outsmart RAS-addicted cancers and we continue to show our tireless commitment to patients in pursuit of this goal. With recent scientific and business progress, we believe that the company is in an excellent position to fulfill our mission on behalf of cancer patients.

This concludes our prepared remarks for today. And I'll now turn the call over to the operator for the Q&A session.

Operator?.

[Operator Instructions] And our first question comes from Alec Stranahan with Bank of America..

Just a couple from us. First on 6236, given there could be some overlap between the pan-RAS and the individual RAS inhibitors that you're developing in terms of patients who could benefit. Curious just how you're thinking about parallel development of these assets.

And is the strategy just increasing shelf line goal? Or do you see discrete market opportunities either mono or combo for each of these assets? And then secondly, when you look at 5552, obviously, some interesting early activity here as monotherapy.

But as you think about combination studies moving forward, are there particular drug partners or tumor types you think are more interesting to start with? Or is this really going to depend on the data update that we'll see next year?.

Thanks, Alex. Appreciate your question. Maybe I'll comment on the first question and then perhaps Steve can comment on the second. So the first question is about RMC-6236 versus mutant selective inhibitors.

At this stage, I think we don't know enough to be able to say exactly which indications will best for most benefit from the multi-RAS inhibitor that hits multiple RAS variants, including wild-type versus the mutant selective inhibitor.

We have some ideas about that but we're really going to need to see what we learn in the clinic in order to guide that. Our guess is that it will depend on tissue type, other co-mutations and perhaps even stage of disease, that's something we'll just have to learn.

So at this point, we're in dose escalation, we'll figure out the optimal way to dose each of these compounds and then we'll begin to see where the activity is and what the limitations are on each. Ultimately, we might see these put together in combinations anyway.

It may be that RMC-6236 combined with 6291 is the most effective way to preempt emergence of resistance mutations and the same could apply for 9805 and other RAS [ph] selective inhibitors. It's just too early to tell at this point and we'll play out all of these.

And as I said, our guess is that there will be certain circumstances in which one particular paradigm might apply more completely than another paradigm we shall see. Second question is RMC-5552.

Steve?.

The primary focus of the single-agent dose escalation program that we've been running with RMC-5552 so far was really to assess whether or not we have a drug here that is worthy of further development in combination with our RAS [ph] Companion inhibitor. I think we've so far demonstrated clearly that it is. We have shown ON timely toxicity [ph].

We have PK exposures that are within the range that are consistent with activity in the precolomodils [ph] and we have efficacy. So we're fairly confident that this is worth taking forward the RAS(ON) inhibitors.

There are really 2 classes of co-mutation that occur in combination with RAS mutations that are probably going to be the initial focus of the development for RMC-5552.

There are co-mutations where the mTOR signaling pathway is directly affected, the ones the most color there, obviously, 10 loss [ph], PR3-kinase mutation, a couple of rare mutations perhaps in mTOR itself.

And then, there are the other class mutations which are probably more familiar to you, that tangentially seem to impact mTOR halfway signaling and those particularly STKLM and keep 1.

And we have plenty of preclinical data now that RMC-5552 can act very favorably in combination with our RAS(ON) inhibitors to really turn around tumor regressions in tumors that co-express keep 1 mutations and STK mutations.

As you know, the P1 co-mutant GMOs [ph], these lung tumors do not do so well with single-agent basis, at least the first generation RAS(ON) inhibitors. So that's a fair -- it's a fairly linear development path for RMC-5552, Ultimately, down the road, maybe other things we could do with that compound but the initial focus is the co-mutants.

There are a lot of them. I mean, for instance, if you look at perhaps in colon cancer, about 1/3 of them co-express a mutation in RAS [ph] problem..

Our next question comes from Jonathan Chang with SVB Securities..

This is Faisal Khurshid on for Jonathan. I wanted to ask if you could comment at all on pace of enrollment for the multi-RAS versus the muni-specific programs like the G12C.

Do you expect one to go faster than another? And then do you also plan to provide any color as the study goes along on what your dose levels have been cleared?.

Thanks for your question. In terms of pace of enrollment, they're both doing fine. I think they're both on track with expectations.

What were our expectations? We’ll we expected that Pharmacy 6236 would have an abundance of patients and investigators highly interested because of the absence of approved targeted therapies in most of those indications and that's what we're seeing. We have very, very high demand for the fixed number of stuff that are available.

But nonetheless, we are seeing enrollment in both of these studies I'm sorry and things are progressing per plan.

Your second question was?.

As the studies progress, do you plan to provide any color on what your dose levels have been cleared?.

Not as an isolated bit of information. It probably won't really mean much to anybody because these are entirely new compounds. Obviously, when we report some additional information about tolerability, safety and/or activity will provide dose information associated with it..

Got it. Okay. And if I could ask one more.

Have you looked at how the chaperone protein levels change over time as you dose? Is this a dynamic thing? Or are these consistently expressed in the tumors?.

Steve, do you want to comment on that?.

Yes. The chaperone proceed of interest is of cycle for day is hugely abundant in most mammalian tissues and circa human tissues and also in cancer. And so far, we have struggled very hard to detecting the meaningful change in the expression of cycle for the day over time with any given exposure to our RAS(ON) inhibitors.

So we don't expect that to be -- we don't expect that to be something that is going to be possible to detect in the clinic, even if we had an assay that could deal with the massive overuse of that process..

And our next question comes from Eric Joseph with JPMorgan..

Actually, a couple from us.

So looking to initial data with 6291 next year, Mark, what would qualify as superior activity in your view relative to the RAS(ON) inhibitors? Is that a statement in the PR, that a function of PD or activity in RAS inhibitors prior RAS inhibitor-treated patients or perhaps better response rates in certain histologies? And to the extent it's the latter, are there certain tumor types that you're aiming to bias enrollment towards?.

Yes. Thanks, Eric. I appreciate the question. I think as we start to collect data, the things we're going to see initially will be safety and tolerability. And then from there, we'll start to see -- we expect a tumor activity.

And obviously, objective responses are the things we'll see earliest and durability is something we have to wait to collect that information. That's not something you see early.

Any combination of those, I think, will be helpful to us, keeping in mind that this is a new platform and so we often hear from investors that they simply want to see evidence that you can dose the patient, achieve exposure levels that should be active and then see activity from it. So that's probably where things will start.

And then from there, over time, we'll build the cumulative evidence about its superiority. I think to emphasize the big picture here in the G12C space, it's very likely that combination therapy is really where the puck is going to be. We're already moving there, as you know.

And so focusing too much on trying to prove differentiation around monotherapy isn't probably the wisest thing for us to do, although we certainly believe mechanistically, that's the case and we think we will accumulate some data pointing in that direction. But the real impact for patients is going to come from those combinations.

And so demonstrating that Pharmacy-6291 can be combined effectively, tolerably, safely with the other agents will be extremely important and that can only come after we get to reach a recommended Phase II dose and schedule and then we can move forward from there with those combinations..

Okay, got it.

And then a follow-up, if I could, on the G12D RMC-980, I guess, looking to starting patient dosing in mid-next year, how should we be thinking about the therapeutic window for this compound? And I guess relatedly, are you able to characterize the PK of the compound relative to the multi-RAS and the G12C candidates?.

I'll try to process the second part of your question. But for the first part of it, is it mutant selective Well, it's highly mutant selective. And it is a covalent compound.

It's the only own KRAS-G12 covalent compound and it carries all of the benefits of covalence C which is that even after you take away drug from the system, there's still covalently bound inhibitor that's blocking G12D in the own state.

So it's highly mutant selective compared to, let's say, RMC-6236 which is served by definition, equipotent against all RAS [ph], including wild type.

So there certainly is going to be a ceiling for dosing RMC-6236, at which point you would start to see on pathway, normal tissue, RAS, media side effects and there shouldn't be the same dose ceiling for RMC9805. But those are just different to some degree, technical characteristics.

What really matters is can you dose either of them sufficiently to achieve the desired anti-tumor effect safely and tolerably and we project the answer to that is yes based on preclinical results but I have to demonstrate that in the clinic. The second part of your question, maybe you could unpack that a little bit for me which is PK.

I wasn't quite sure what you were trying to get at from the PK question. I'd like to understand that [ph]..

Yes, absolutely. Some competitors in this space have noted challenges in coming up with an oral formulation, similar to your approach with 9805. So I guess just looking for a little more color around the PK properties of your compound, how you feel about how investors get comfortable with a favorable oral bioavailability with that compound.

I guess are there -- is there a contrast with 6291 that might be informative here?.

Look, it's barely bioavailable across multiple species and at percent that are considered very much appropriate for oral drugs. So we have to demonstrate that in humans. But based on the preclinical species, it's an orally available drug. We'll have no difficulty getting above the IC50 or even IC90 and it also has a relatively long half-life.

And then it's also retained in tissues because of the covalence fees. So you put all of those pieces together, it behaves very much like RMC-6291 in terms of dose PK/PD efficacy and selectivity relationships. Those are all fine. So I don't think that the investigators are going to have concerns about that.

This concerns not all the other drugs that are not orally bioavailable and not covalent. But I'm not sure there should be any particular issue about Pharmacy 9805. Of course, we have to validate that in humans.

What I just described to you is the preclinical but given how extensively they've been characterized, I guess, we'd be surprised if those properties don't carry over into people..

And our next question comes from Marc Frahm with Cowen..

Maybe just to start with 6236, that trial has been open for a few months now and actively enrolling for a few months. And it has a pretty broad criteria in terms of mutations and tissue types that are eligible.

Are you seeing a bias there of enthusiasm across different -- for specific mutations or specific tumor types that we -- that should be thinking about the population tending to be enriched in?.

Thanks, Marc. Nice to hear from you. There is a tremendous amount of interest in it and there are far more patients who are interested in participating in the study that we've been able to release lots for. So I don't think that there's any bias other than that epidemiologically. There are some fetations that are more common than others.

G12C and G12D here are significantly more common than other mutations and they have no available targeted therapy. And so they are tending to show up but they're not the only ones showing up. They just are tending to show up.

And they're showing -- tending to show up in gastrointestinal tumors because that's where they're most prevalent but they're not only showing up in gastrointestinal tumors either. So, I don't think there's anything from an investigator perspective that's biasing these.

Now keep in mind, we've restricted enrollment based on genotype initially to the KRAS G12 mutations to a small number of those, essentially excluding G12C initially because those patients have available to them a G12C inhibitor, including now RMC-6291 in the clinical trial.

And eventually, we'll come back to those G12C patients after we get to a dose that we think is going to be most appropriate for those who have, for example, failed the G12C inhibitor. But other than that, I don't really think we've seen any particular figure on the scale..

Okay, that's helpful.

And then can you refer to these initial ones in the clinic as well as the G12D is the first wave and you have some of these other mutation-specific inhibitors that being held back as leave too? So just what's your thoughts on what do you need to see from the first wave of agents in order to pull the trigger on Wave 2 and start moving those into the clinic?.

Yes, that's a very good question, Marc. I think our concept here is less about that they're being gated by a particular result in the first wave and more about making sure we have the resources and focus to move those first 3 inhibitors forward as efficiently and effectively as possible.

So I think that's the main thing that's gating it, it’s more about resources and less about getting to a particular result. With that said, obviously, amongst these first 3 inhibitors, we expect to see activity, tolerability and safety that guide us to confidence that the platform itself delivers as expected and so on.

And that will also likely increase the availability of resources as well. As you know, there's a relationship there. So that at least indirectly would open up the availability resources for the second wave. So that's how we think about it. I don't think there's a particular result.

There are a number of things we could see next year that would give us and I think investors confidence that the platform is valid and that there should be things reading through to other inhibitors in the platform..

And our next question comes from Michael Schmidt with Guggenheim Partners..

I had 2 development-side questions. Perhaps first on 6291, the G12C inhibitors.

So what are your thoughts on the possible registration pathway down the road in context of these moving competitive environment in the KRAS G12C space where you probably have multiple OFF inhibitors fully approved in the second line perhaps registration studies ongoing in first line? How do you think that could affect -- what are your thoughts on the ultimate development strategy for 691 in that context?.

Yes. Steve, do you want to....

Sure. I can. Yes. And I think Mark has just laid out the first premise which is that the most likely development part for RMC-6291 was going to be in combination with something rather than as a single agent. We are not going to exclude development to a single agent is demonstrably superior to the approved KRAS(OFF) inhibitors.

But the most likely thing is it will be developed in combination. And then really, in that context, it's going to be a combination of efficacy and tolerability in combination with whatever the best companion is.

We have the opportunity to combine with something possibly even with RMC-6236 and go chasing after patients that have progressed or failed KRAS G12C(OFF) inhibitor, we can go head-to-head with them in that second-line space or we can go head-to-head with them in any of the first-line spaces that are currently all available to us.

And I think it really largely depends on what we see in the initial phase of the Phase I trial which, of course, will include combination, dose-escalation, components as we get further up the single-agent dose escalation. So I think let's keep that in mind.

We're very optimistic about the potential for RMC-6291 and we're not shying away from pretty much all of the potential opportunities for [indiscernible]..

If I could add to Steve's comment there, I think he said a couple of important things I want to tie back together.

Preclinically, we, of course, showed a pretty extensive data set comparing it head-to-head with one of the leading care CBF inhibitors [ph] that didn't necessarily foreshadow that, that's going to be the primary path forward in the clinic.

That was simply to demonstrate that the mechanism behind the inhibitor translates into the best possible RAS-pathway expression and therefore, antitumor effects regressions and durability. We believe that.

Steve is often fund of saying that in a combination treatment regimen for RAS inhibitor, you want to combine the very best RAS inhibitor you can with the very best companion or companions you can. And 6291 is the very best KRAS G12C inhibitor out there that we will want to combine it with RAS Companion inhibitors; so that's our default path.

I think we assume that's the main path. But if it does stand out in monotherapy in ways that reflect what we've seen preclinically, significantly, that could open up a monotherapy path to approval but it's just not our primary assumption around this..

Yes. Okay, that makes sense.

And then on 6236, perhaps more near term, once you have reached to recommend Phase II dose in the Phase I portion of the study, how do you think about pursuing specific tumor histologies or specific mutations in Phase Ib study in dose expansion cohorts down the road?.

Yes. Well, I'm going to turn it over to Steve. He said we're open-minded. So maybe you can put some matters around how open-minded we are..

I think it's pretty straightforward in RMC-6236. I think as you already said, the preclinical data shows that the activity definitely favors the G12 mutant tumors. And so there are essentially 3 histotypes there. You've got non-small cell lung cancer, pancreatic cancer and colorectal cancer.

And we are planning to develop RMC-6236 really in 3 different ways. The first is as a single agent. We will test it as a single agent and we will see whether the single-agent activity in any of those cysteines is sufficient for half 2 registration.

The second thing we'll do is we'll do combinations starting with things that don't have overlapping toxicity. So the most obvious candidate there will be checkpoint inhibitors. And the third plant that is to use RMC-6236 as of companion inhibitors for mutant selective RAS inhibitors and the first one in the first half there will be RMC-6291.

So, I think you can expect a fairly broad program for RMC-6236 once a recommended Phase II dosing schedule has been established. And the actual breadth and the focus will really depend on the degree switches as active as a single agent..

Michael, we were also asking, though, if we see a signal in both, let's say, G12C and G12D how would we go to prioritize one versus the other? Is that what you're asking about also?.

Yes, just generally. There will be overlap with less selective inhibitors there will be overlap in tumor authority as well. I'm just wondering how you prefer one with the other..

Sure. Well, those are different axes and we'll have to look at those as Steve said. But with regard to mutations, I think one of the benefits of doing the back-build strategy that we have loaded up for this is that we will collect additional information than just the information we need to go escalate.

We will also be able to enroll additional patients at the previous dose level and keep doing that as long as we wish to up the dose escalation scale. And that allows us to sample more patients which means more genotypes and more histotypes but it's not going to give us a grade of 10 by 100. It's still going to be relatively small numbers.

And we'll be very excited if we see signals across multiple isotypes and genotypes that maybe we'll have to decide what to prioritize or maybe not. We'll just have to see what information emerges there..

[Operator Instructions] Our next question comes from Chris Shibutani with Goldman Sachs..

I have 2 questions, There was recent [indiscernible] just some initial preclinical data for their compound. They screened against [indiscernible].

Can you provide us with any thoughts on whether you think this was an appropriate comparator for them to screen against? And potentially, what differences this might have with respect to 6291, just put some perspective on benchmarking..

Yes. I guess, first, in terms of the data that we've seen publicly it seems as if their comparator was really KRAS G12C(OFF) inhibitors. And we would expect to see a difference in KRAS G12C(OFF) inhibitors. We published, as you know, extensively on in in vivo models, a large number of in vivo lung cancer models versus a G12C(OFF) inhibitor.

I think they showed 1 or 2 models. So it's really hard to comment on how active that compound is. We're comparing a very large data set with a very small data set. I don't know what to do with that. I think in terms of conceptually, it's not clear to us why having G12C(OFF) inhibitory activity is advantageous if you have a G12C(ON) inhibitor.

In other words, the on form is the active pool. It's the oncogenic protein and the (OFF) protein is not active. So it's not clear to us and frankly, an experiments in which we combined RMC-6291 with a KRAS G12C (OFF) inhibitor, we didn't see any advantage over RMC6291. So conceptually, we're not sure why there would be in the advantage.

And from a data point of view, it's just comparing apples and oranges at this point. So we just keep moving 691 forward..

And then using 018, would no reference anything to compare there with 691..

M&A, that was a tool compound that Brian Cortland reported and it's not an in vivo tool compound. So I'm not really sure I'm not sure why we would compare to a tool compound. RMC-6291 is the development candidate that's now being dosed in humans I don't think that they use -- I think they used R018 because it was available. Yes.

I don't think it's a relevant comparator..

Got it. And then finally, you're going to be announcing a fifth less on candidate. I think we'll get that disclosure before the end of the year.

Any hands as to the potential venue for that?.

Yes, I don't know if it will be disclosed just before the end of the year or just after the end of the year. But we will select it by the end of the year and there may not really be much of a venue to do that. But once we get into the early part of 2023, there are some investor venues that might be available to us..

Our next question comes from Jay Olson with Oppenheimer..

We're curious to know your views on the collaboration that was announced today between Incyte [ph] and Mirati to combine insights oral small molecule PD-L1 inhibitor with Mirati's adagrasib.

Any comments you could share with us? Would you go par to your thoughts about the deal and any plans you may have for partnering your RAS(ON) inhibitors with molecules in development at other companies in terms of types of combinations that would be synergistic and whether or not you think it's important to have an all-oral combination regimen versus combining your oral drugs with an antibody would be great?.

Yes. Thanks, Jay. Maybe just to take the last part of your question first. Adagrasib [ph] is a big gorilla drug in the field today, it's used by everybody in first-line therapy for lung cancer in particular. And I don't think the fact that it's dosed parenterally really causes a challenge for anybody.

So I'm not sure that we're aware of the need for an oral agent. So that's my first comment. I don't know, Steve he’s agreeing with that. And then with regard to Miratia’s study, it's interesting. We always are interested to see what other people go do. It doesn't really change much.

I don't think being successful with an oral agent will give them any particular advantage over being successful with KEYTRUDA. Maybe your last question was a much bigger question which is what are all the possible things we might combine within the immunology field or elsewhere, again, KEYTRUDA is the big gorilla. And doctors are used to using it.

It's well-established; there's a lot of data to support it. So I think it is important, particularly in immune-responsive tumors, like lung cancer to find a way to combine with an anti-PD-1 and the most well-validated antibody is KEYTRUDA, although there are others that are active as well.

We're very interested in going beyond that but everything else beyond that is pretty exploratory at this point. And I think can't be considered a primary account. I'd say stay tuned. But for the moment, I think it's very well-defined what one needs to do to get your drug in front of the right patients..

As there are no more questions in the queue, I'd like to turn the call back to Dr. Goldsmith for closing remarks..

Thank you, operator and thank you to everyone for participating today. We appreciate your support of Revolution Medicines..

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day..