Revolution Medicines(RVMD) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section cautions investors about forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially - This report contains forward-looking statements concerning the company's business, operations, and financial performance, which are subject to known and unknown risks and uncertainties that may cause actual results to differ materially[9] - These statements cover various aspects including product candidate development, regulatory approvals, market size, collaborations, commercialization, intellectual property, financial estimates, and the competitive landscape[10] - Investors are cautioned not to unduly rely on these forward-looking statements as predictions of future events, and the company does not plan to publicly update or revise them unless required by applicable law[11] PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (unaudited) This item presents the unaudited condensed consolidated financial statements for Revolution Medicines, Inc., prepared in conformity with GAAP and SEC rules for interim financial reporting Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $402,438 | $543,064 | | Marketable securities | $1,734,733 | $1,746,235 | | Total current assets | $2,176,439 | $2,327,632 | | Total assets | $2,429,568 | $2,558,301 | | Total current liabilities | $184,534 | $163,914 | | Liability related to the sale of future royalties | $245,081 | $— | | Total liabilities | $564,199 | $293,097 | | Total stockholders' equity | $1,865,369 | $2,265,204 | - Total assets decreased by $128,733 thousand from December 31, 2024, to June 30, 2025, primarily due to decreases in cash and cash equivalents and marketable securities[17] - Total liabilities significantly increased by $271,102 thousand, mainly driven by the new $245,081 thousand liability related to the sale of future royalties[17] Condensed Consolidated Statements of Operations and Comprehensive Loss This statement outlines the company's revenues, expenses, and net loss over specific reporting periods, reflecting operational performance | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $224,134 | $134,932 | $429,883 | $252,953 | | General and administrative | $40,580 | $21,711 | $75,591 | $44,549 | | Total operating expenses | $264,714 | $156,643 | $505,474 | $297,502 | | Loss from operations | $(264,714) | $(156,643) | $(505,474) | $(297,502) | | Net loss | $(247,787) | $(133,233) | $(461,203) | $(249,236) | | Net loss per share (basic and diluted) | $(1.31) | $(0.81) | $(2.45) | $(1.51) | - Net loss increased by $114,554 thousand (86%) for the three months ended June 30, 2025, and by $211,967 thousand (85%) for the six months ended June 30, 2025, compared to the prior year periods[20][147] - Total operating expenses increased by $108,071 thousand (69%) for the three months and $207,972 thousand (70%) for the six months ended June 30, 2025, primarily due to higher research and development expenses[20][147] Condensed Consolidated Statements of Stockholders' Equity This statement details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Common Stock | $18 | $18 | | Additional Paid-in Capital | $4,001,666 | $4,063,053 | | Accumulated Other Comprehensive Income | $1,321 | $1,302 | | Accumulated Deficit | $(1,737,801) | $(2,199,004) | | Total Stockholders' Equity | $2,265,204 | $1,865,369 | - Total stockholders' equity decreased by $399,835 thousand from December 31, 2024, to June 30, 2025, primarily due to the increase in accumulated deficit from net losses[23] - Additional paid-in capital increased by $61,387 thousand, driven by stock-based compensation expense, stock option exercises, and employee stock purchase plan proceeds[23][28][171] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(416,192) | $(288,727) | | Net cash provided by (used in) investing activities | $18,327 | $(140,022) | | Net cash provided by financing activities | $257,457 | $8,314 | | Net decrease in cash, cash equivalents and restricted cash | $(140,408) | $(420,435) | | Cash, cash equivalents and restricted cash - end of period | $406,354 | $278,744 | - Net cash used in operating activities increased by $127,465 thousand, from $(288,727) thousand in 2024 to $(416,192) thousand in 2025[28][166] - Net cash provided by investing activities significantly improved, shifting from a net outflow of $(140,022) thousand in 2024 to a net inflow of $18,327 thousand in 2025[28][166] - Net cash provided by financing activities increased substantially from $8,314 thousand in 2024 to $257,457 thousand in 2025, primarily due to proceeds from the sale of future royalties[28][166][171] Notes to Condensed Consolidated Financial Statements These notes provide additional information and explanations essential for understanding the condensed consolidated financial statements 1. Organization This note describes the company's business, its focus on oncology, and its financial condition regarding operating losses and funding - Revolution Medicines, Inc. is a clinical-stage precision oncology company founded in October 2014, focused on developing novel targeted therapies for RAS-addicted cancers[31] - The company has incurred net operating losses since inception, with an accumulated deficit of $2.2 billion as of June 30, 2025[32] - Management believes that existing cash, cash equivalents, and marketable securities will enable the company to fund planned operations for at least 12 months from the issuance date of these financial statements[32] 2. Summary of significant accounting policies This note outlines the key accounting principles and methods used in preparing the financial statements, including estimates and revenue recognition - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules for interim financial reporting, including all normal and recurring adjustments[33] - Management's estimates, such as fair value, revenue recognition, clinical accruals, and valuation of assets and liabilities, are inherently uncertain and subject to change, with actual results potentially differing materially[34] - The company accounts for the revenue participation right purchase and sale agreement as a debt financing, amortized over the estimated life of the royalty term arrangement using the effective interest method[36][37] Research and Development Expense Components (in thousands) | Research and Development Expense Components (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Third-party R&D expenses | $144,138 | $81,657 | $276,881 | $150,926 | | Salaries and other employee-related expenses | $41,170 | $26,328 | $78,364 | $51,490 | | Stock-based compensation expense | $19,126 | $12,775 | $35,505 | $23,020 | | Amortization of intangible assets | $267 | $267 | $534 | $534 | | Other R&D costs | $19,433 | $13,905 | $38,599 | $26,983 | | Total research and development expense | $224,134 | $134,932 | $429,883 | $252,953 | 3. Fair value measurements This note details the categorization and valuation of financial instruments recorded at fair value using a three-tier hierarchy - Financial instruments recorded at fair value are categorized into a three-tier hierarchy (Level 1, 2, or 3) based on the observability of inputs used in their valuation[47] Financial Assets and Warrant Liabilities (in thousands) | Financial Assets (in thousands) | Total (June 30, 2025) | Level 1 | Level 2 | Level 3 | Total (December 31, 2024) | Level 1 | Level 2 | Level 3 | | :---------------------------- | :-------------------- | :------ | :------ | :------ | :------------------------ | :------ | :------ | :------ | | Money market funds | $350,642 | $350,642 | $— | $— | $409,233 | $409,233 | $— | $— | | Commercial paper | $159,293 | $— | $159,293 | $— | $245,658 | $— | $245,658 | $— | | Certificates of deposit | $3,833 | $— | $3,833 | $— | $9,048 | $— | $9,048 | $— | | U.S. government and agency securities | $867,787 | $— | $867,787 | $— | $1,051,754 | $— | $1,051,754 | $— | | Corporate bonds | $754,880 | $— | $754,880 | $— | $571,654 | $— | $571,654 | $— | | Total Assets | $2,136,435 | $350,642 | $1,785,793 | $— | $2,287,347 | $409,233 | $1,878,114 | $— | | Warrant liabilities | $5,328 | $2,981 | $2,347 | $— | $3,189 | $1,784 | $1,405 | $— | - The fair value of public warrants is categorized as Level 1, while private warrants are Level 2 due to not being actively traded, despite having substantially similar terms[50] 4. Available-for-sale securities This note provides details on the company's available-for-sale securities, including their amortized cost, fair value, and unrealized gains/losses Available-for-sale securities (in thousands) | Available-for-sale securities (in thousands) | Amortized cost (June 30, 2025) | Estimated fair value (June 30, 2025) | Gross unrealized gain (June 30, 2025) | Gross unrealized loss (June 30, 2025) | | :----------------------------------------- | :------------------------------- | :----------------------------------- | :------------------------------------ | :------------------------------------ | | Marketable securities | $1,733,423 | $1,734,733 | $1,595 | $(285) | | Cash equivalents | $401,710 | $401,702 | $(1) | $(7) | | Total | $2,135,133 | $2,136,435 | $1,594 | $(292) | Contractual Maturity of Available-for-sale securities (in thousands) | Contractual Maturity (in thousands) | Amortized cost (June 30, 2025) | Estimated fair value (June 30, 2025) | | :-------------------------------- | :------------------------------- | :----------------------------------- | | Mature in one year or less | $1,694,180 | $1,694,788 | | Mature after one year through two years | $440,953 | $441,647 | | Total | $2,135,133 | $2,136,435 | - As of June 30, 2025, the total estimated fair value of available-for-sale securities was $2,136,435 thousand, with a net unrealized gain of $1,302 thousand[51] 5. Balance sheet components This note breaks down specific balance sheet items, including property and equipment, and accrued expenses and other current liabilities Property and equipment, net (in thousands) | Property and equipment, net (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Laboratory equipment | $28,045 | $25,192 | | Leasehold improvements | $21,341 | $14,280 | | Computer equipment and software | $6,536 | $5,046 | | Furniture and fixtures | $1,655 | $1,200 | | Construction in progress | $500 | $394 | | Less: accumulated depreciation and amortization | $(25,028) | $(21,823) | | Total property and equipment, net | $33,049 | $24,289 | Accrued expenses and other current liabilities (in thousands) | Accrued expenses and other current liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------------- | :------------ | :---------------- | | Accrued compensation | $21,726 | $30,774 | | Accrued research and development | $89,583 | $63,635 | | Accrued professional services | $2,914 | $1,623 | | Other | $462 | $583 | | Total accrued expenses and other current liabilities | $114,685 | $96,615 | - Property and equipment, net, increased by $8,760 thousand, primarily due to increases in laboratory equipment and leasehold improvements[53] - Accrued expenses and other current liabilities increased by $18,070 thousand, mainly driven by higher accrued research and development expenses[54] 6. Intangible assets and goodwill This note provides details on the company's intangible assets, including in-process research and development, and goodwill Intangible assets, net (in thousands) | Intangible assets, net (in thousands) | Gross value (June 30, 2025) | Accumulated amortization (June 30, 2025) | Net book value (June 30, 2025) | Remaining useful life (in years) | | :------------------------------------ | :-------------------------- | :--------------------------------------- | :----------------------------- | :------------------------------- | | In-process research and development — RAS Programs | $55,800 | $— | $55,800 | n/a | | Developed technology — tri-complex platform | $7,480 | $(7,144) | $336 | 0.4 | | Total | $63,280 | $(7,144) | $56,136 | | - Intangible assets, net, totaled $56,136 thousand as of June 30, 2025, primarily comprising in-process research and development for RAS Programs[55] - Goodwill remained constant at $14,608 thousand as of June 30, 2025, with no impairment recognized[57] 7. Commitments and contingencies This note outlines the company's contractual obligations, such as operating leases, and discusses legal proceedings - The company has expanded its operating lease for office, laboratory, and R&D space in Redwood City, California, to include multiple buildings, with the lease term extended through December 31, 2035[58] Operating Lease Liabilities (in thousands) | Operating Lease Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Operating lease liability – current | $13,088 | $12,872 | | Operating lease liability – noncurrent | $119,699 | $122,971 | | Total operating lease liabilities | $132,787 | $135,843 | - Total operating lease cost, net of sublease income, was $3,652 thousand for the three months ended June 30, 2025, and $7,207 thousand for the six months ended June 30, 2025[64] - The company is involved in a legal proceeding (Nemeth v. Casdin, et al.) but does not believe it will have a material adverse impact on its operations or financial position[68][69] 8. Liability related to the sale of future royalties This note details the agreement for the sale of future royalties, including proceeds received and the accounting treatment as a debt financing - In June 2025, the company entered into a Royalty Purchase Agreement with Royalty Pharma, receiving an upfront payment of $250.0 million for tiered royalty payments on future worldwide net product sales of RMC-6236 and RMC-9805 products[72] - The agreement includes potential for up to an additional $1.0 billion in funding across four tranches, contingent on specific clinical and commercial milestones[73][74] - The agreement is accounted for as a debt financing, with a liability of $245,081 thousand recorded as of June 30, 2025, and non-cash interest expense recognized using the effective interest method[78][79][82] Liability related to the sale of future royalties (in thousands) | Liability related to the sale of future royalties (in thousands) | Amount | | :------------------------------------------------------- | :----- | | Liability related to the sale of future royalties - beginning balance | $— | | Proceeds from the sale of future royalties | $250,000 | | Issuance costs | $(5,785) | | Non-cash interest expense associated with the sale of future royalties | $846 | | Amortization of issuance costs | $20 | | Liability related to the sale of future royalties - ending balance | $245,081 | 9. Term loan facility This note describes the senior secured term loan agreement, outlining potential tranches, interest rates, and collateral - In June 2025, the company entered into a senior secured term loan agreement providing for up to $750.0 million in term loans across three tranches[83] - The first tranche is required to be drawn upon FDA marketing approval for daraxonrasib for metastatic PDAC by January 1, 2028, with optional tranches upon commercial milestones[83] - The term loans bear interest at a floating rate (three-month term SOFR + 5.75%) and are secured by substantially all of the company's assets[84][88] - As of June 30, 2025, no amounts had been drawn under the Loan Agreement, and no liability was recorded[88] 10. Common stock This note provides information on the company's authorized and outstanding common stock, and shares reserved for future issuance - As of June 30, 2025, the company had 186,901,268 shares of common stock issued and outstanding, with 300,000,000 shares authorized[17][90] - The company has reserved 32,905,133 shares of common stock for future issuance, including for outstanding options, unvested restricted stock units, and the employee stock purchase plan[90] - No dividends have been declared on common stock to date[89] 11. Stock-based compensation This note details the company's stock-based compensation plans, including expense recognition and unrecognized compensation costs - The 2020 Incentive Award Plan and 2020 Employee Stock Purchase Plan are the primary stock-based compensation plans, with options and RSUs typically vesting over four years[91][93] Stock-based compensation expense (in thousands) | Stock-based compensation expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $19,126 | $12,775 | $35,505 | $23,020 | | General and administrative | $9,704 | $7,000 | $18,409 | $12,963 | | Total | $28,830 | $19,775 | $53,914 | $35,983 | - Total stock-based compensation expense increased by $9,055 thousand (46%) for the three months and $17,931 thousand (50%) for the six months ended June 30, 2025, compared to the prior year periods[98] - As of June 30, 2025, unrecognized compensation cost for unvested stock options was $178.5 million and for RSUs was $127.0 million, expected to be recognized over weighted-average periods of 2.85 and 2.96 years, respectively[96][97] 12. Net loss per share attributable to common stockholders This note presents the calculation of basic and diluted net loss per share, including the impact of potentially dilutive shares Net loss per share attributable to common stockholders | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders (in thousands) | $(247,787) | $(133,233) | $(461,203) | $(249,236) | | Weighted-average common shares (basic and diluted) | 188,583,288 | 165,141,936 | 188,365,805 | 164,935,542 | | Net loss per share (basic and diluted) | $(1.31) | $(0.81) | $(2.45) | $(1.51) | - Net loss per share (basic and diluted) increased from $(0.81) to $(1.31) for the three months and from $(1.51) to $(2.45) for the six months ended June 30, 2025[99] - Potentially dilutive shares, totaling 23,970,215 as of June 30, 2025, were excluded from diluted EPS calculations due to their anti-dilutive effect resulting from the company's net loss[100] 13. Subsequent events This note discloses significant events occurring after the balance sheet date, such as new legislation and lease amendments - On July 4, 2025, the 'One Big Beautiful Bill Act' (OBBBA) was enacted, modifying corporate income tax code, with its potential impact on the company's financial statements currently being assessed[101] - In July 2025, the company amended its Redwood City lease to add approximately 60,841 square feet at 400 Saginaw Drive, with an initial annual base rent of $3.9 million and a $4.1 million tenant improvement allowance[102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, emphasizing its status as a clinical-stage precision oncology company focused on RAS-addicted cancers Overview This overview introduces Revolution Medicines as a clinical-stage precision oncology company, detailing its pipeline and recent clinical developments - Revolution Medicines is a clinical-stage precision oncology company developing novel targeted therapies for RAS-addicted cancers, leveraging sophisticated structure-based drug discovery capabilities[105] - The pipeline includes RAS(ON) inhibitors (e.g., daraxonrasib, elironrasib, zoldonrasib) and RAS companion inhibitors, designed to be used as monotherapy or in combination regimens[106][109] - Daraxonrasib (RMC-6236) received Breakthrough Therapy Designation for previously treated metastatic pancreatic ductal adenocarcinoma (PDAC) in patients with KRAS G12 mutations, with global Phase 3 trials ongoing[110][111] - Elironrasib (RMC-6291) received Breakthrough Therapy Designation for KRAS G12C-mutated NSCLC, and zoldonrasib (RMC-9805) showed encouraging initial antitumor activity in PDAC and NSCLC[121][127] - The company has established collaborations with Tango Therapeutics, Summit Therapeutics, Aethon Therapeutics, Break Through Cancer, and Iambic Therapeutics to advance its pipeline and research efforts[136][137][138][139][140] Financial Operations Overview This section outlines the key components of the company's financial operations, including research and development, general and administrative expenses, and interest income - Research and development expenses, which are expensed as incurred, consist primarily of external costs for preclinical studies, clinical trials, manufacturing, and discovery programs[141][142] - R&D expenses are expected to increase for the foreseeable future as product candidates advance into later stages of development and larger clinical trials[143] - General and administrative expenses, comprising personnel, professional services, and commercial preparation activities, are also expected to increase due to anticipated growth[144] - Interest income is primarily from cash equivalents and marketable securities, while other income (expense) includes non-cash interest expense from the sale of future royalties and foreign currency exchange differences[145][146] Results of operations This section analyzes the company's financial performance, focusing on changes in operating expenses and interest income over the reporting periods Research and development expenses This section details the components and changes in research and development expenses, highlighting key drivers for increases R&D Expense Components (in thousands) | R&D Expense Components (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Increase/ (decrease) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Increase/ (decrease) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------- | :----------------------------- | :----------------------------- | :------------------- | | Daraxonrasib (RMC-6236) | $76,907 | $30,220 | $46,687 | $144,382 | $57,218 | $87,164 | | Zoldonrasib (RMC-9805) | $23,515 | $14,715 | $8,800 | $47,983 | $26,675 | $21,308 | | Elironrasib (RMC-6291) | $18,192 | $15,754 | $2,438 | $37,208 | $25,684 | $11,524 | | Preclinical programs | $25,457 | $19,367 | $6,090 | $46,810 | $37,439 | $9,371 | | Salaries and other employee-related expenses | $41,170 | $26,328 | $14,842 | $78,364 | $51,490 | $26,874 | | Stock-based compensation expense | $19,126 | $12,775 | $6,351 | $35,505 | $23,020 | $12,485 | | Other research and development costs | $19,433 | $13,905 | $5,528 | $38,599 | $26,983 | $11,616 | | Total research and development expense | $224,134 | $134,932 | $89,202 | $429,883 | $252,953 | $176,930 | - Research and development expenses increased by $89.2 million (66%) for the three months and $176.9 million (70%) for the six months ended June 30, 2025, compared to the prior year[148][149] - The increase was primarily driven by higher clinical trial and manufacturing expenses for daraxonrasib ($46.7 million QoQ, $87.2 million YoY) and increased salaries and employee-related expenses due to headcount growth ($14.8 million QoQ, $26.9 million YoY)[148][149] General and administrative expenses This section analyzes the changes in general and administrative expenses, identifying the primary factors contributing to their increase - General and administrative expenses increased by $18.9 million (87%) for the three months and $31.0 million (70%) for the six months ended June 30, 2025, compared to the prior year[150][151] - Key drivers for the increase include higher salaries and employee-related expenses ($6.5 million QoQ, $10.2 million YoY), commercial preparation expenses ($5.3 million QoQ, $8.9 million YoY), and stock-based compensation expense ($2.7 million QoQ, $5.4 million YoY)[150][151] Interest income This section discusses the company's interest income, explaining the factors influencing its changes over the reporting periods Interest income (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $22,404 | $21,487 | $47,319 | $45,247 | - Interest income increased by $0.9 million for the three months and $2.1 million for the six months ended June 30, 2025, compared to the same periods in 2024, due to a larger cash, cash equivalents, and marketable securities balance[152] Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations, detailing its cash position and future funding requirements - As of June 30, 2025, the company had $2.1 billion in cash, cash equivalents, and marketable securities, which management believes is sufficient to fund planned operations for at least 12 months[162][164] - The company's operations have been financed primarily by public offerings of common stock, the EQRx Acquisition, and the Royalty Purchase Agreement[154][155][156][162] - Substantial additional funds will be required for future development and commercialization efforts, which may be sought through equity offerings, debt financings, collaborations, or licensing arrangements, with potential risks of dilution or restrictive covenants[164] Cash Flows This section provides a detailed analysis of the company's cash inflows and outflows from operating, investing, and financing activities Cash used in operating activities This section explains the primary drivers of cash used in operating activities, including net loss and non-cash charges - Cash used in operating activities was $416.2 million for the six months ended June 30, 2025, primarily driven by a net loss of $461.2 million[167] - Non-cash charges, including stock-based compensation ($53.9 million) and depreciation and amortization ($4.0 million), partially offset the net loss[167] - Changes in operating assets and liabilities included a $12.4 million increase in accrued expenses and other current liabilities and a $16.5 million increase in other noncurrent assets[167] Cash provided by (used in) investing activities This section details the cash flows from investing activities, highlighting the shift from net outflow to net inflow - Investing activities provided $18.3 million in cash for the six months ended June 30, 2025, a significant improvement from a $140.0 million outflow in the prior year[169][170] - This shift was mainly due to $1.1 billion in maturities of marketable securities and $6.4 million from sales of marketable securities, partially offset by $1.0 billion in purchases of marketable securities and $10.7 million in property and equipment purchases[169] Cash provided by financing activities This section analyzes the significant increase in cash provided by financing activities, primarily due to the sale of future royalties - Financing activities provided $257.5 million in cash for the six months ended June 30, 2025, a substantial increase from $8.3 million in the prior year[171][172] - The primary driver was $250.0 million in proceeds from the sale of future royalties[171] - Additional proceeds came from common stock issuance under equity incentive plans ($2.8 million) and the employee stock purchase plan ($4.6 million)[171] Contractual Obligations and Commitments This section outlines the company's significant contractual obligations, including operating leases and royalty payment agreements - The company's contractual obligations include operating lease liabilities for its Redwood City facilities[173] - The Royalty Purchase Agreement creates an obligation for tiered royalty payments on future worldwide net product sales of daraxonrasib and zoldonrasib[175] - The company also enters into generally cancelable agreements with contract research organizations and contract manufacturing organizations for clinical trials and materials[174] Indemnification Agreements This section describes the company's standard indemnification arrangements and their potential financial implications - The company enters into standard indemnification arrangements in the ordinary course of business, agreeing to reimburse indemnified parties for losses related to intellectual property infringement claims[176] - The maximum potential amount of future payments under these perpetual agreements is not determinable, but the company believes their fair value is minimal as no related costs have been incurred to date[176] Critical Accounting Policies, Significant Judgments and Use of Estimates This section highlights the critical accounting policies and the inherent uncertainties in management's estimates and assumptions - The company's financial statements are based on U.S. GAAP, requiring management to make significant estimates and assumptions that affect reported amounts and disclosures[177] - These estimates, particularly for future royalties, are inherently uncertain and subject to change, with actual results potentially differing materially from the company's estimates[178] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item discusses the company's exposure to market risks, primarily interest rate and foreign currency risks, and how they are managed - The company is exposed to market risks primarily related to interest rate sensitivities and foreign currency fluctuations[181] - Interest rate risk is managed by maintaining a portfolio of high-credit quality, short-term investments, including cash, cash equivalents, and marketable securities totaling $2.1 billion as of June 30, 2025[182] - Foreign currency risk is not material, as expenses are generally denominated in U.S. dollars, and a 10% change in current exchange rates would not have a material effect on financial results[183] Item 4. Controls and Procedures This item reports on the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, at a reasonable assurance level[184] - No material changes in internal control over financial reporting were identified during the three and six months ended June 30, 2025[185] - The effectiveness of any internal control system is subject to inherent limitations, providing reasonable, not absolute, assurances[186] PART II. OTHER INFORMATION This part includes additional information such as legal proceedings, risk factors, sales of equity securities, defaults, mine safety, and exhibits Item 1. Legal Proceedings This item addresses the company's involvement in legal proceedings and their potential impact on the business - The company is not currently a party to any litigation or legal proceedings that management believes are likely to have a material adverse effect on its business[189] - Regardless of outcome, litigation can adversely impact the business due to defense and settlement costs, diversion of management resources, and other factors[189] Item 1A. Risk Factors This extensive section details the principal risks and uncertainties affecting the company's business, covering financial, operational, regulatory, and intellectual property aspects - The company is a clinical-stage precision oncology company with a limited operating history, no products approved for commercial sale, and a history of significant losses, making future profitability uncertain[195][197] - Substantial additional financing will be required to achieve the company's goals, which may not be available on acceptable terms and could force delays or termination of product development or commercialization efforts[200][201] - The business is dependent on the successful development, regulatory approval, and ultimate commercialization of its current and future product candidates, which is a lengthy, costly, and inherently unpredictable process[215][216][217] - The company faces significant competition from major multinational pharmaceutical and biotechnology companies with greater financial, manufacturing, marketing, and development resources[237] - Obtaining and maintaining sufficient patent and other intellectual property protection for product candidates and technology is critical, but involves complex legal issues, high costs, and uncertainties regarding validity and enforceability[379][380][385] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item reports on any unregistered sales of equity securities or use of proceeds from registered securities during the period - No unregistered sales of equity securities were reported for the period[478] - No use of proceeds from the sale of registered securities was reported for the period[479] Item 3. Defaults Upon Senior Securities This item reports on any defaults upon senior securities during the period - No defaults upon senior securities were reported for the period[481] Item 4. Mine Safety Disclosures This item reports on any mine safety disclosures during the period - No mine safety disclosures were reported for the period[482] Item 5. Other Information This item indicates that there is no other information to report - No other information was reported for the period[483] Item 6. Exhibits This item lists the exhibits filed as part of the Form 10-Q, including the Revenue Participation Right Purchase and Sale Agreement, Loan Agreement, certifications of principal executive and financial officers, and Inline XBRL documents - Key exhibits filed include the Revenue Participation Right Purchase and Sale Agreement and the Loan Agreement, both dated June 23, 2025[484] - Certifications of the Principal Executive Officer and Principal Financial Officer are furnished as Exhibits 31.1, 31.2, 32.1, and 32.2[484] - Portions of certain exhibits have been omitted pursuant to Regulation S-K, as the information is not material and is treated as private or confidential[485][486] Signatures This section contains the required signatures of the company's principal executive and financial officers for the Form 10-Q filing - The Quarterly Report on Form 10-Q is signed by Mark A. Goldsmith, M.D., Ph.D., Chief Executive Officer, and Jack Anders, Chief Financial Officer, on August 6, 2025[491][492]