PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's analysis of financial condition and operations Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific reporting dates | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | Change (vs. Dec 31, 2023) | |:----------------------|-------------:|-------------:|--------------------------:| | Assets | | | | | Cash and cash equivalents | $201,262 | $696,148 | $(494,886) | | Marketable securities | $1,348,219 | $1,156,807 | $191,412 | | Total current assets | $1,579,139 | $1,879,281 | $(300,142) | | Total assets | $1,762,999 | $2,061,705 | $(298,706) | | Liabilities | | | | | Total current liabilities | $110,863 | $143,851 | $(32,988) | | Total liabilities | $196,695 | $235,511 | $(38,816) | | Stockholders' Equity | | | | | Total stockholders' equity | $1,566,304 | $1,826,194 | $(259,890) | - The company's total assets decreased by $298.7 million from December 31, 2023, to September 30, 2024, primarily driven by a significant reduction in cash and cash equivalents, partially offset by an increase in marketable securities12 - Total stockholders' equity decreased by $259.9 million, largely due to an accumulated deficit of $1.54 billion as of September 30, 2024, reflecting ongoing net losses1322 Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's financial performance and comprehensive loss over specific periods | Metric (in thousands, except per share) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:----------------------------------------|--------------------------------:|--------------------------------:|-------------------------------:|-------------------------------:| | Collaboration revenue | $— | $— | $— | $10,838 | | Total operating expenses | $175,712 | $123,248 | $473,214 | $318,040 | | Loss from operations | $(175,712) | $(123,248) | $(473,214) | $(307,202) | | Interest income | $20,411 | $10,947 | $65,658 | $28,505 | | Net loss | $(156,288) | $(108,434) | $(405,524) | $(274,830) | | Net loss per share (basic & diluted) | $(0.94) | $(0.99) | $(2.45) | $(2.65) | - Collaboration revenue was zero for both the three and nine months ended September 30, 2024, a decrease from $10.8 million in the nine months ended September 30, 2023, due to the termination of the Sanofi Agreement in June 20231577144 - Research and development expenses significantly increased by 41% to $151.8 million for the three months and 47% to $404.1 million for the nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by clinical trial expenses for RMC-6236, RMC-9805, and RMC-6291, as well as increased headcount and related costs15146147 - Net loss increased to $156.3 million for the three months and $405.5 million for the nine months ended September 30, 2024, compared to $108.4 million and $274.8 million respectively in 2023, reflecting higher operating expenses partially offset by increased interest income15 Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit | Metric (in thousands, except share data) | Balance at Dec 31, 2023 | Balance at Sep 30, 2024 | |:-----------------------------------------|------------------------:|------------------------:| | Common Shares | 164,674,594 | 167,748,336 | | Common Stock Amount | $16 | $16 | | Additional Paid-in Capital | $2,963,342 | $3,105,708 | | Accumulated Other Comprehensive Income | $544 | $3,812 | | Accumulated Deficit | $(1,137,708) | $(1,543,232) | | Total Stockholders' Equity | $1,826,194 | $1,566,304 | - Total stockholders' equity decreased by $259.9 million from December 31, 2023, to September 30, 2024, primarily due to the accumulated deficit from net losses, partially offset by increases in additional paid-in capital from stock issuances1618 - Additional paid-in capital increased by $142.4 million, driven by proceeds from stock option exercises, employee stock purchase plan, and at-the-market offerings, as well as stock-based compensation expense1618 Condensed Consolidated Statements of Cash Flows This section details the sources and uses of cash from operating, investing, and financing activities | Metric (in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:----------------------|-------------------------------:|-------------------------------:| | Net cash used in operating activities | $(419,146) | $(230,009) | | Net cash provided by (used in) investing activities | $(161,491) | $37,804 | | Net cash provided by financing activities | $85,608 | $389,846 | | Net change in cash, cash equivalents and restricted cash | $(495,029) | $197,641 | | Cash, cash equivalents and restricted cash - end of period | $204,150 | $360,790 | - Net cash used in operating activities significantly increased to $419.1 million for the nine months ended September 30, 2024, from $230.0 million in the prior year, primarily due to higher net loss and changes in operating assets and liabilities20163164 - Investing activities shifted from providing $37.8 million in cash in 2023 to using $161.5 million in 2024, mainly due to increased purchases of marketable securities and property and equipment20165166 - Cash provided by financing activities decreased substantially to $85.6 million in 2024 from $389.8 million in 2023, reflecting lower proceeds from common stock issuances compared to the prior year's underwritten public offering20167168 Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Organization This note describes the company's business, its financial history, and future capital funding strategy - Revolution Medicines, Inc. is a clinical-stage precision oncology company focused on developing novel targeted therapies for RAS-addicted cancers, founded in October 201421 - The company has incurred net operating losses since inception, with an accumulated deficit of $1.5 billion as of September 30, 2024, but believes existing cash and marketable securities will fund operations for at least 12 months22 - The company has funded operations through common stock issuances, the EQRx acquisition, and prior collaboration payments. Future capital needs depend on R&D spending, with no assurance of additional financing availability on acceptable terms22 Public Offerings This note details the company's capital raising activities through various public stock offerings - The company sold 1,294,050 shares under the 2021 ATM Program for $59.3 million net proceeds during the nine months ended September 30, 202423 - A new 2024 ATM Program was initiated in August 2024, replacing the 2021 program, under which 333,526 shares were sold for $15.0 million net proceeds during the three and nine months ended September 30, 202424 - In March 2023, a public offering of 15,681,818 shares generated $323.7 million in net proceeds25 2. Summary of significant accounting policies This note outlines the key accounting principles, estimates, and recent pronouncements impacting the financial statements - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP and SEC interim reporting rules, including all necessary normal and recurring adjustments26 - Management's estimates, including fair value of acquired assets, revenue recognition, clinical accruals, and stock-based compensation, are based on historical experience and complex judgments, which are inherently uncertain28 - Warrants assumed from the EQRx acquisition are classified as derivative liabilities, with fair value changes recognized in the consolidated statements of operations and comprehensive loss30 - The company is evaluating the impact of new FASB ASUs on segment reporting (ASU 2023-07), income tax disclosures (ASU 2023-09), and disaggregation of income statement expenses (ASU 2024-03), effective for fiscal years beginning after December 15, 2023, 2024, and 2026, respectively323334 3. Acquisition This note details the acquisition of EQRx, Inc., including the purchase price allocation and financial impact - On November 9, 2023, Revolution Medicines acquired EQRx, Inc., issuing 54.8 million shares of common stock and paying $4.0 million in taxes3536 - The EQRx acquisition was accounted for as a capital-raising transaction with an asset acquisition component, primarily acquiring EQRx's cash, cash equivalents, and marketable securities3738 Acquisition Metric (in thousands) | Acquisition Metric (in thousands) | Amount | |:----------------------------------|-------:| | Purchase price | $1,097,099 | | Net assets acquired | $1,153,026 | | Excess fair value over purchase price | $(55,927) | - The excess fair value of net assets acquired over the purchase price ($55.9 million) was recorded to additional paid-in capital, and transaction costs of $20.7 million were a direct reduction to additional paid-in capital4041 - Warrants and contingent earn-out shares from EQRx were converted into Revolution Medicines' Warrants and earn-out shares, classified as liabilities, with fair values of $6.9 million and $0.5 million, respectively, included in the purchase price4344 4. Fair value measurements This note explains the company's fair value hierarchy for financial instruments and their categorization - The company categorizes financial instruments measured at fair value into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)4647 Asset/Liability (in thousands) | Asset/Liability (in thousands) | Total (Sep 30, 2024) | Level 1 | Level 2 | Level 3 | |:-------------------------------|---------------------:|--------:|--------:|--------:| | Assets: | | | | | | Money market funds | $136,416 | $136,416| $— | $— | | Commercial paper | $187,933 | $— | $187,933| $— | | Certificates of deposit | $9,367 | $— | $9,367 | $— | | U.S. government and agency securities | $811,464 | $— | $811,464| $— | | Corporate bonds | $402,234 | $— | $402,234| $— | | Liabilities: | | | | | | Contingent earn-out liability | $206 | $— | $— | $206 | | Warrant liabilities | $2,763 | $1,546 | $1,217 | $— | - As of September 30, 2024, the majority of assets measured at fair value (marketable securities) are categorized as Level 2, while money market funds are Level 1. The contingent earn-out liability is classified as Level 3 due to unobservable inputs4851 5. Available-for-sale securities This note provides details on the company's available-for-sale marketable securities, including their fair values and maturities Marketable Securities (in thousands) | Marketable Securities (in thousands) | Amortized Cost (Sep 30, 2024) | Estimated Fair Value (Sep 30, 2024) | Amortized Cost (Dec 31, 2023) | Estimated Fair Value (Dec 31, 2023) | |:-------------------------------------|------------------------------:|------------------------------------:|------------------------------:|------------------------------------:| | Commercial paper | $142,816 | $143,007 | $460,979 | $460,987 | | Certificates of deposit | $9,341 | $9,367 | $— | $— | | U.S. government and agency securities | $791,370 | $793,611 | $610,188 | $610,602 | | Corporate bonds | $400,879 | $402,234 | $85,030 | $85,218 | | Total marketable securities | $1,344,406 | $1,348,219 | $1,156,197 | $1,156,807 | - Total marketable securities increased by $191.4 million from $1.16 billion at December 31, 2023, to $1.35 billion at September 30, 2024, primarily driven by increases in U.S. government and agency securities and corporate bonds51 - As of September 30, 2024, the majority of available-for-sale securities, totaling $1.39 billion, mature in one year or less, indicating a short-term investment strategy52 6. Balance sheet components This note provides a breakdown of specific balance sheet items, including property and equipment, and accrued expenses Property and Equipment, Net (in thousands) | Property and Equipment, Net (in thousands) | Sep 30, 2024 | Dec 31, 2023 | |:-------------------------------------------|-------------:|-------------:| | Laboratory equipment | $24,512 | $21,505 | | Leasehold improvements | $14,103 | $11,952 | | Computer equipment and software | $6,975 | $5,806 | | Total Property and equipment, net | $24,814 | $22,865 | - Property and equipment, net, increased by $1.9 million to $24.8 million as of September 30, 2024, primarily due to additions in laboratory equipment and leasehold improvements53 Accrued Expenses and Other Current Liabilities (in thousands) | Accrued Expenses and Other Current Liabilities (in thousands) | Sep 30, 2024 | Dec 31, 2023 | |:--------------------------------------------------------------|-------------:|-------------:| | Accrued compensation | $19,077 | $23,613 | | Accrued research and development | $55,199 | $45,003 | | Total accrued expenses and other current liabilities | $78,011 | $74,694 | - Accrued research and development expenses increased by $10.2 million to $55.2 million, reflecting increased R&D activities, while accrued compensation decreased by $4.5 million54 7. Intangible assets and goodwill This note details the company's intangible assets and goodwill, including their valuation and changes Intangible Assets, Net (in thousands) | Intangible Assets, Net (in thousands) | Gross Value | Accumulated Amortization | Net Book Value (Sep 30, 2024) | |:--------------------------------------|------------:|-------------------------:|------------------------------:| | In-process research and development — RAS Programs | $55,800 | $— | $55,800 | | Developed technology — tri-complex platform | $7,480 | $(6,343) | $1,137 | | Total | $63,280 | $(6,343) | $56,937 | - Net intangible assets decreased slightly to $56.9 million as of September 30, 2024, from $57.7 million at December 31, 2023, primarily due to amortization of developed technology5558 - Goodwill remained constant at $14.6 million as of September 30, 2024, with no impairment recognized59 8. Commitments and contingencies This note outlines the company's contractual obligations, primarily related to operating leases - The company expanded its Redwood City lease to include the 500 Building in July 2024 and the 600 Building in November 2024, increasing office and laboratory space and future lease obligations6090 Operating Lease Liabilities (in thousands) | Operating Lease Liabilities (in thousands) | Sep 30, 2024 | Dec 31, 2023 | |:-------------------------------------------|-------------:|-------------:| | Operating lease liability – current | $8,396 | $7,369 | | Operating lease liability – noncurrent | $78,310 | $80,575 | | Total operating lease liabilities | $86,706 | $87,944 | - Total operating lease liabilities decreased slightly to $86.7 million as of September 30, 2024, with a weighted-average remaining lease term of 11.3 years and a weighted-average discount rate of 8.4%6669 9. Sanofi collaboration agreement This note details the termination of the collaboration agreement with Sanofi and its financial implications - The collaborative research, development, and commercialization agreement with Sanofi for SHP2 inhibitors, including RMC-4630, was terminated in June 202373 - Upon termination, licenses granted to Sanofi became fully paid-up, royalty-free, perpetual, and irrevocable, with all rights and obligations reverting to Revolution Medicines77 - No collaboration revenue was recognized from this agreement for the three months ended September 30, 2024 and 2023, and zero for the nine months ended September 30, 2024, compared to $10.9 million in 202377 10. Common stock This note provides information on the company's authorized, issued, and outstanding common stock - As of September 30, 2024, the company had 300,000,000 authorized shares of common stock ($0.0001 par value), with 173,308,336 shares issued and 167,748,336 shares outstanding1378 - No dividends have been declared to date78 11. Stock-based compensation This note details the stock-based compensation expense recognized and unrecognized for equity awards Stock-based Compensation (in thousands) | Stock-based Compensation (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:----------------------------------------|--------------------------------:|--------------------------------:|-------------------------------:|-------------------------------:| | Research and development | $13,369 | $8,151 | $36,389 | $21,493 | | General and administrative | $7,406 | $5,515 | $20,369 | $14,852 | | Total | $20,775 | $13,666 | $56,758 | $36,345 | - Total stock-based compensation expense increased by 52% to $20.8 million for the three months and 56% to $56.8 million for the nine months ended September 30, 2024, compared to the same periods in 202386 - As of September 30, 2024, there was $120.8 million of unrecognized compensation cost for stock options (weighted-average period of 2.79 years) and $81.0 million for RSUs (weighted-average period of 2.92 years)8485 12. Net loss per share attributable to common stockholders This note presents the calculation of basic and diluted net loss per share for common stockholders Metric (except per share) | Metric (except per share) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:--------------------------|--------------------------------:|--------------------------------:|-------------------------------:|-------------------------------:| | Net loss | $(156,288) | $(108,434) | $(405,524) | $(274,830) | | Weighted-average shares outstanding | 166,843,984 | 109,233,340 | 165,576,333 | 103,704,719 | | Net loss per share (basic & diluted) | $(0.94) | $(0.99) | $(2.45) | $(2.65) | - Net loss per share improved slightly to $(0.94) for the three months ended September 30, 2024, from $(0.99) in the prior year, despite a higher net loss, due to a significant increase in weighted-average shares outstanding88 - Potentially dilutive shares, including options, RSUs, ESPP shares, warrants, and earn-out shares, totaling 20.6 million as of September 30, 2024, were excluded from diluted EPS calculation due to their anti-dilutive effect89 13. Subsequent events This note discloses significant events that occurred after the balance sheet date - In November 2024, the company amended its Redwood City lease to include an additional 46,961 square feet at the 600 Building, with an initial annual base rent of approximately $3.3 million and a $2.3 million tenant improvement allowance90 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, strategic focus on RAS-addicted cancers, and liquidity Overview This section provides a high-level summary of the company's business, strategic focus, and pipeline progress - Revolution Medicines is a clinical-stage precision oncology company developing novel targeted therapies for RAS-addicted cancers, utilizing proprietary tri-complex technology for RAS(ON) inhibitors and RAS companion inhibitors929394 - The company is advancing a deep pipeline of RAS(ON) inhibitors, including RMC-6236 (multi-selective), RMC-6291 (G12C-selective), and RMC-9805 (G12D-selective), with RMC-6236 currently in a global Phase 3 registrational trial (RASolute 302 study) for pancreatic cancer959697 - Interim clinical data for RMC-6236 in PDAC patients showed a median PFS of 8.5 months (KRAS G12X) and 7.6 months (G12, G13, Q61 mutations) in the 2L setting, and an ORR of 29% (2L) and 22% (3L+)104106 - RMC-6291 demonstrated preliminary clinical activity in KRAS G12C NSCLC and CRC patients, with dose-dependent pharmacokinetics and correlation between ctDNA reduction and clinical response111 - RMC-9805 showed favorable tolerability and preliminary clinical activity in KRAS G12D-mutated solid tumors, with an ORR of 30% and DCR of 80% in PDAC patients (2L+ setting) receiving 1,200 mg/day116119 - The EQRx acquisition in November 2023 provided $1.1 billion in net cash, cash equivalents, and marketable securities, significantly enhancing the company's financial resources131 Financial Operations Overview This section summarizes key aspects of the company's financial operations, including revenue and expense drivers - Collaboration revenue ceased after the termination of the Sanofi Agreement in June 2023133 - Research and development expenses are primarily driven by third-party contract organizations, clinical trial sites, manufacturing costs, and employee-related expenses, and are expected to increase as product candidates advance135138 - General and administrative expenses are expected to increase due to anticipated growth in operating and commercial preparation activities, leading to higher personnel and professional services costs139 Results of operations This section provides a detailed analysis of the company's revenue, expenses, and net loss for the reporting periods | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Change (3 Months) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change (9 Months) | |:----------------------|----------------------------:|----------------------------:|------------------:|----------------------------:|----------------------------:|------------------:| | Collaboration revenue | $— | $— | $— | $— | $10,838 | $(10,838) | | R&D expenses | $151,752 | $107,735 | $44,017 | $404,129 | $274,663 | $129,466 | | G&A expenses | $23,960 | $15,513 | $8,447 | $69,085 | $43,377 | $25,708 | | Loss from operations | $(175,712) | $(123,248) | $(52,464) | $(473,214) | $(307,202) | $(166,012) | | Interest income | $20,411 | $10,947 | $9,464 | $65,658 | $28,505 | $37,153 | | Net loss | $(156,288) | $(108,434) | $(47,854) | $(405,524) | $(274,830) | $(130,694) | - Research and development expenses increased by $44.0 million (41%) for the three months and $129.5 million (47%) for the nine months ended September 30, 2024, driven by clinical trial expenses for RMC-6236, RMC-9805, RMC-6291, and increased employee-related costs146147 - General and administrative expenses rose by $8.4 million (54%) for the three months and $25.7 million (59%) for the nine months ended September 30, 2024, due to increased headcount, stock-based compensation, commercial preparation, and legal/accounting fees148149 - Interest income increased by $9.5 million and $37.2 million for the three and nine months, respectively, due to a larger cash, cash equivalents, and marketable securities balance and higher interest rates150 Liquidity and capital resources This section assesses the company's ability to meet its short-term and long-term financial obligations - As of September 30, 2024, the company had $1.5 billion in cash, cash equivalents, and marketable securities, and an accumulated deficit of $1.5 billion157158 - The company believes its existing capital will fund planned operations for at least 12 months, but substantial additional financing will be required for future development and commercialization efforts159 - Cash used in operating activities increased to $419.1 million for the nine months ended September 30, 2024, from $230.0 million in the prior year, primarily due to higher net loss and changes in operating assets and liabilities163164 - Cash provided by financing activities decreased significantly to $85.6 million in 2024 from $389.8 million in 2023, reflecting lower proceeds from common stock issuances compared to the prior year's underwritten public offering167168 Contractual obligations and commitments This section outlines the company's significant contractual obligations and commitments - The company has contractual obligations related to its office and laboratory space lease in Redwood City, California170 - Agreements with contract research organizations, contract manufacturing organizations, and other vendors are generally cancelable with 30 to 90 days prior written notice171 Off-balance sheet arrangements This section confirms the absence of any material off-balance sheet arrangements - The company has not entered into any off-balance sheet arrangements172 Indemnification agreements This section describes the company's standard indemnification agreements in the ordinary course of business - The company enters into standard indemnification arrangements in the ordinary course of business, primarily for intellectual property infringement claims173 - The maximum potential amount of future payments under these arrangements is not determinable, but the fair value is believed to be minimal as no costs have been incurred to date173 Critical accounting policies, significant judgments and use of estimate This section highlights the critical accounting policies and estimates that require significant management judgment - The preparation of financial statements requires management to make estimates and assumptions affecting reported asset and liability amounts and disclosures174 - There have been no material changes to critical accounting estimates since the 2023 Annual Report on Form 10-K175 Recent accounting pronouncements This section discusses the company's evaluation of recently issued accounting standards updates - The company is evaluating the impact of recently announced accounting pronouncements on segment reporting, income tax disclosures, and disaggregation of income statement expenses176 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, including interest rate and foreign currency fluctuations Interest rate risk This section describes the company's exposure to interest rate fluctuations on its financial instruments - The company is exposed to interest rate risk through its cash, cash equivalents, and marketable securities, which totaled $1.5 billion as of September 30, 2024177178 - The investment policy focuses on preserving capital and maximizing income from investments in high credit quality, short-term duration securities177 - Due to the short-term maturities of its cash equivalents and marketable securities, an immediate one percent change in interest rates would not materially affect their fair value178 Foreign currency risk This section outlines the company's exposure to foreign currency exchange rate fluctuations - The company's expenses are primarily in U.S. dollars, but it has limited contracts with vendors for R&D services denominated in foreign currencies (Euro, British Pound, Chinese Yuan)179 - Foreign currency transaction gains and losses have not been material, and the company does not have a formal hedging program179 - A 10% increase or decrease in current exchange rates would not have a material effect on financial results179 Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and internal control over financial reporting Evaluation of disclosure controls and procedures This section reports on management's assessment of the effectiveness of disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2024180 Changes in internal control over financial reporting This section addresses any material changes in internal control over financial reporting during the period - There were no changes in internal controls over financial reporting during the three and nine months ended September 30, 2024, that materially affected or are reasonably likely to materially affect internal control over financial reporting181 Inherent limitation on the effectiveness over financial reporting This section acknowledges the inherent limitations of any internal control system in providing absolute assurance - The effectiveness of any internal control system is subject to inherent limitations, providing reasonable, not absolute, assurances182 - Projections of effectiveness to future periods are subject to risks that controls may become inadequate or compliance may deteriorate182 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits Item 1. Legal Proceedings This section confirms the absence of material legal proceedings that would adversely affect the company's business - The company is not currently a party to any litigation or legal proceedings that management believes would have a material adverse effect on its business, financial condition, results of operations, or cash flows184 - Litigation, regardless of outcome, can adversely impact the business due to defense and settlement costs and diversion of management resources184 Item 1A. Risk Factors This section details material risks and uncertainties that could adversely affect the company's business, financial condition, and stock price Summary of Material Risks Associated with Our Business This section provides a high-level overview of the most significant risks facing the company - The company is a clinical-stage precision oncology company with a limited operating history, no approved products, and significant accumulated losses, making future profitability uncertain185 - Substantial additional financing is required for development and commercialization, and failure to obtain it could force delays or termination of product development efforts185 - Business success is dependent on the successful development, clinical trials, regulatory approval, and commercialization of current and future product candidates, which is highly uncertain185 - The company faces significant competition, and if competitors develop more effective, safer, or less expensive products, commercial opportunities will be negatively impacted185 - Inability to obtain and maintain sufficient intellectual property protection could allow competitors to commercialize similar products, harming the company's competitive position185 Risks related to our limited operating history, financial position and need for additional capital This section addresses risks stemming from the company's early stage, financial losses, and ongoing capital requirements - The company has incurred significant net losses since inception, with an accumulated deficit of $1.5 billion as of September 30, 2024, and expects to continue incurring losses for several years191 - Future profitability depends on successfully completing development, obtaining regulatory approvals, and commercializing product candidates, which is not expected for several years, if ever192 - The EQRx acquisition, completed in November 2023, provided $1.1 billion in net cash, cash equivalents, and marketable securities, but also introduced various integration and realization risks195199 - Substantial additional financing is required for development and commercialization, and a failure to obtain it on acceptable terms could lead to delays, reductions, or termination of programs197199203 Risks related to product development and regulatory process This section details the inherent risks in drug development, clinical trials, regulatory approvals, and commercialization - The business is highly dependent on the successful development, clinical trials, marketing approval, and commercialization of product candidates, which is a lengthy, expensive, and uncertain process209210 - Preclinical development is uncertain, and programs may experience delays or fail to advance to clinical trials, impacting regulatory approvals and commercialization214215 - Direct inhibition of RAS proteins is historically challenging and unproven, posing a risk that the company's tri-complex technology approach may not be successful in developing approvable products220221 - Interim or preliminary clinical data may differ materially from final data, and early-stage clinical trial results may not be predictive of later-stage success, leading to potential setbacks222261262 - Product candidates may cause undesirable side effects, leading to clinical development delays, denial of marketing approval, limited commercial potential, or significant negative consequences post-approval264265269 - The regulatory approval process is expensive, time-consuming, and unpredictable, with no guarantee of approval, and even if approved, may come with limitations or costly post-marketing requirements271272274 - Commercial success depends on market acceptance by physicians, patients, and payors, which may be limited if products are only approved for later lines of therapy or if target patient populations are small289291292 - Unfavorable pricing regulations or third-party coverage and reimbursement policies could harm the business, as obtaining and maintaining adequate reimbursement is challenging and uncertain294295299 - The company may fail to select or capitalize on the most promising drug candidates, potentially diverting resources from better opportunities or making incorrect prioritization decisions300301304 - Reliance on existing or development of novel complementary/companion diagnostics is crucial, and failure or delays in this area could adversely affect patient selection for trials and commercial potential307308311 - Fast track or breakthrough therapy designations may not lead to faster development or approval, and accelerated approval pathways carry risks of withdrawal if confirmatory trials fail or post-marketing requirements are not met314316320322 - Orphan drug designation may be sought but is not guaranteed, and even if obtained, market exclusivity may not effectively protect against competition or could be lost under certain conditions324327328 - Product liability lawsuits could result in substantial liabilities, decreased demand, reputational harm, and limit commercialization, with insurance potentially being inadequate or unavailable329330 - Healthcare legislative reforms, such as the ACA and IRA, could significantly impact the business by controlling costs, limiting reimbursement, or imposing new pricing regulations332335336 - Disruptions at regulatory agencies (e.g., FDA) due to funding shortages or global health concerns could hinder product development and commercialization timelines339341 - Stringent privacy laws (HIPAA, CCPA, GDPR) and evolving data protection landscape impose significant compliance costs and risks of penalties, investigations, and reputational harm for non-compliance342345349351352 - Information technology system failures, cyberattacks, or cybersecurity deficiencies could materially affect business operations, R&D programs, and financial condition, with potential for data loss, delays, and significant costs353354357358 Risks related to reliance on third parties This section addresses risks associated with the company's dependence on external collaborators, contractors, and vendors - Future dependence on collaborations for development and commercialization poses risks, including collaborators having different incentives, delaying trials, developing competing products, or failing to commit sufficient resources360361 - Inability to establish additional collaborations on commercially reasonable terms could force the company to alter development and commercialization plans, potentially delaying programs or increasing expenditures364368 - Conflicts with collaborators or strategic partners could lead to adverse actions, limit strategy implementation, or result in costly litigation369370 - Reliance on third parties (CROs, medical institutions) to conduct clinical trials increases risks of non-compliance with regulatory requirements (GCP), delays, data unreliability, and potential enforcement actions371372373377 - Dependence on third parties for manufacturing preclinical, clinical, and commercial drug supplies increases the risk of insufficient quantities, quality issues, delays, and higher costs, potentially impacting development and commercialization efforts379380381384 - Future relationships with customers and third-party payors are subject to anti-kickback, fraud and abuse, false claims, and other healthcare laws, exposing the company to criminal sanctions, civil penalties, and reputational harm391392395 Risks related to intellectual property This section outlines risks concerning the company's ability to obtain, maintain, and enforce its intellectual property rights - Failure to obtain and maintain sufficient patent and other intellectual property protection could allow competitors to commercialize similar products, harming the company's competitive position and ability to commercialize product candidates396397 - The patent position of pharmaceutical companies is highly uncertain, and the issuance, scope, validity, enforceability, and commercial value of the company's patent rights are highly uncertain400 - Reliance on licensing agreements with third parties means that failure to comply with obligations, termination of agreements, or disputes could harm the company's competitive position and ability to develop product candidates404407410 - Inability to obtain necessary licenses from third parties on commercially reasonable terms could prevent the development or commercialization of affected product candidates and lead to infringement claims412 - Failure to identify relevant third-party patents or incorrect interpretation of their scope/expiration could lead to infringement claims, substantial damages, and prohibition from commercializing products413416417 - Patent terms may be inadequate to protect competitive position, as patents might expire before or shortly after commercialization, allowing competitors to enter the market sooner418419 - Protecting intellectual property rights globally is expensive and challenging, as foreign laws and enforcement practices may be less extensive than in the U.S., potentially allowing competitors to exploit inventions421423 - Changes in patent law, such as the Leahy-Smith America Invents Act and the European Patent Package, could diminish the value of patents, increase prosecution costs, and introduce uncertainty in litigation424425426 - Failure to comply with procedural, document submission, and fee payment requirements for patents could result in abandonment or lapse of patent rights428429 - Lawsuits to protect or enforce patents are expensive, time-consuming, and may be unsuccessful, potentially leading to invalidation of patents or inability to stop infringers430431432 - Third parties may allege infringement, misappropriation, or ownership of the company's intellectual property, leading to costly legal proceedings and potential loss of rights or personnel436438440443 - Inability to protect the confidentiality of trade secrets would harm the business and competitive position, as monitoring unauthorized disclosures is difficult and remedies may be inadequate446447 - Inadequate protection of trademarks and trade names could impede brand recognition and competitive effectiveness448449 - Intellectual property rights have limitations and may not address all potential threats, such as competitors developing similar products not covered by patents or independent development of technologies450 Risks related to employee matters and managing our growth This section covers risks related to human capital, organizational growth, and operational challenges - The company is highly dependent on key personnel, and failure to attract, motivate, and retain qualified employees, consultants, and advisors could impede business strategy and objectives451452453 - A limited commercial organization means the company must build or partner for marketing, sales, and distribution capabilities, which is expensive, time-consuming, and carries significant risks454455 - Future growth will require increasing the size of the organization, posing challenges in managing additional managerial, R&D, operational, and financial personnel and systems456457 - Strategic transactions, such as acquisitions (e.g., EQRx), could affect liquidity, dilute stockholders, increase expenses, and divert management's focus, with no guarantee of success460461462 - Failure to comply with environmental, health, and safety laws and regulations could lead to fines, penalties, or significant costs from contamination or injury463464 - The company is subject to risks from natural disasters, catastrophic events, war, terrorism, and political unrest, which could disrupt operations, damage infrastructure, and negatively impact the business466468469 - Misconduct by employees, contractors, or other third parties, including non-compliance with regulatory standards, fraud, or illegal activities, could lead to regulatory sanctions, reputational harm, and significant penalties472473 Risks related to our common stock and warrants This section addresses risks associated with the company's common stock and warrants, including market volatility and ownership structure - The price of the company's common stock is highly volatile and fluctuates substantially due to various factors, including R&D results, competition, regulatory developments, and market conditions, potentially leading to significant losses for investors474 - An active and liquid market for common stock may not be sustained, impairing share value, selling ability, and capital raising477 - The company does not intend to pay cash dividends, so returns are limited to stock value appreciation, which is not guaranteed478 - Executive officers, directors, and their affiliates have significant influence (approximately 8.2% ownership as of September 30, 2024), limiting other stockholders' ability to influence corporate matters and potentially delaying or preventing changes in control479480 - Sales of a substantial number of common stock shares in the public market by existing stockholders could cause the stock price to fall481482 - Warrants may expire worthless if they are not 'in the money' prior to expiration484 - The terms of warrants can be amended adversely to holders with approval from at least 50% of outstanding warrants, potentially increasing exercise price or shortening the exercise period485486 - The company may redeem unexpired warrants prior to exercise at a disadvantageous time for holders, potentially rendering them worthless487489 - The ability to utilize net operating loss carryforwards and other tax attributes may be limited by past or future 'ownership changes' under Sections 382 and 383 of the Internal Revenue Code490491 General risk factors This section covers broad risks including corporate governance, capital raising, litigation, and public company operations - Provisions in charter documents and Delaware law could discourage takeovers and lead to management entrenchment, including a classified board, no cumulative voting, and restrictions on stockholder actions492493494 - Claims for indemnification by directors and officers may reduce available funds to satisfy third-party claims495 - Exclusive forum provisions in charter documents for certain disputes could limit stockholders' ability to choose a favorable judicial forum498499500 - Raising additional capital may cause dilution to stockholders, restrict operations, or require relinquishing rights to technologies501502 - Litigation, including intellectual property claims, can be expensive, time-consuming, and distract personnel, potentially increasing operating losses and reducing resources504505 - The company is subject to U.S. and foreign anti-corruption, anti-money laundering, export control, and sanctions laws, with violations leading to serious consequences506507 - Adverse events in the financial services industry, such as bank failures, could impair access to deposits or other financial assets508509510 - Operating as a public company incurs significantly increased costs and requires substantial management time for compliance initiatives, including Section 404 of Sarbanes-Oxley513514 - Future sales of common stock in financings could cause immediate dilution to stockholders and a decline in stock price515 - If securities analysts cease coverage or publish negative evaluations, the stock price could decline517518 - Failure to maintain proper and effective internal controls over financial reporting could impair the ability to produce accurate and timely financial statements, leading to loss of investor confidence and stock price decline519521 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered equity sales or use of proceeds from registered securities for the period - No unregistered sales of equity securities or use of proceeds from registered securities to report522 Item 3. Defaults Upon Senior Securities This section confirms no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities to report522 Item 4. Mine Safety Disclosures This section indicates no mine safety disclosures are applicable to the company - No mine safety disclosures to report522 Item 5. Other Information This section confirms no other material information to report for the period - No other information to report522 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) as required by the Sarbanes-Oxley Act523524 - Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) are provided for structured data reporting523 - Other exhibits include amendments to the Certificate of Incorporation, Bylaws, a lease agreement, and employment agreements, some incorporated by reference from previous filings524525 Signatures This section contains the required signatures of authorized officers, certifying the quarterly report submission - The report is duly signed on behalf of Revolution Medicines, Inc. by Mark A. Goldsmith, M.D., Ph.D., Chief Executive Officer, and Jack Anders, Chief Financial Officer, on November 6, 2024527528
Revolution Medicines(RVMD) - 2024 Q3 - Quarterly Report