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rvmd-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number: 001-39219

Revolution Medicines, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	47-2029180
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
700 Saginaw Drive Redwood City, CA	94063
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 481-6801

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock $0.0001 Par Value per Share

RVMD

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 9, 2020, the registrant had 66,380,190 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
Special Note Regarding Forward Looking Statements		ii
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholder’s Equity (Deficit)	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	80
	Signatures	81

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

the scope, progress, results and costs of developing our product candidates or any other future product candidates, and conducting preclinical studies and clinical trials, including our RMC-4630 Phase 1/2 clinical program;

•

the scope, progress, results and costs related to the research and development of our pipeline;

•

the timing of and costs involved in obtaining and maintaining regulatory approval for any of current or future product candidates, and any related restrictions, limitations and/or warnings in the label of an approved product candidate;

•

the impact of COVID-19 on our business and operations, including clinical trials, manufacturing suppliers, collaborators, use of contract research organizations and employees;

•

our expectations regarding the potential market size and size of the potential patient populations for RMC-4630, our other product candidates and any future product candidates, if approved for commercial use;

•

our ability to maintain existing and establish new collaborations, licensing or other arrangements and the financial terms of any such agreements, including our collaboration with Sanofi;

•

our commercialization, marketing and manufacturing capabilities and expectations;

•

the rate and degree of market acceptance of our product candidates, as well as the pricing and reimbursement of our product candidates, if approved;

•

the implementation of our business model and strategic plans for our business, product candidates and technology, including additional indications for which we may pursue;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected term of patent protection;

•

estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;

•

developments and projections relating to our competitors and our industry, including competing therapies and procedures;

•

regulatory and legal developments in the United States and foreign countries;

•

the performance of our third-party suppliers and manufacturers;

•

our ability to attract and retain key scientific or management personnel;

•

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012;

•

our expectations regarding our ability to obtain, maintain, enforce and defend our intellectual property protection for our product candidates; and

•

other risks and uncertainties, including those listed under the caption “Risk Factors.”

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements contained herein for any reason after the date of this report to conform these statements to new information, actual results or changes in our expectations, except as required by applicable law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (https://ir.revmed.com), Securities and Exchange Commission, or SEC, filings, webcasts, press releases and conference calls. We use these mediums, including our website, to communicate with the public about our company, our business and other issues. It is possible that the information that we make available may be deemed to be material information. We, therefore, encourage investors and others interested in our company to review the information that we make available through these mediums.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

REVOLUTION MEDICINES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	September 30,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	64,871		$	16,659
Marketable securities		401,269			106,099
Receivable from related party		9,299			8,737
Prepaid expenses and other current assets		7,459			2,486
Total current assets		482,898			133,981
Property and equipment, net		7,035			7,147
Operating lease right-of-use asset		28,194			—
Intangible assets, net		61,212			62,013
Goodwill		14,608			14,608
Restricted cash		1,084			214
Other noncurrent assets		39			2,566
Total assets	$	595,070		$	220,529
Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)
Current liabilities:
Accounts payable	$	6,656		$	11,400
Accrued expenses and other current liabilities		18,974			14,528
Operating lease liability, current		3,645			—
Deferred revenue, related party, current		13,109			17,124
Total current liabilities		42,384			43,052
Deferred rent, noncurrent		—			1,741
Deferred revenue, related party, noncurrent		9,773			14,727
Deferred tax liability		7,085			7,819
Operating lease liability, noncurrent		29,669			—
Other noncurrent liabilities		1,089			655
Total liabilities		90,000			67,994
Commitments and contingencies (Note 7)
Redeemable convertible preferred stock, $0.0001 par value; zero and 192,904,770 shares authorized at September 30, 2020 and December 31, 2019, respectively; zero and 39,600,423 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively; aggregate liquidation preference of zero and $308,688 at September 30, 2020 and December 31, 2019, respectively		—			305,109
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value; 10,000,000 and zero shares authorized at September 30, 2020 and December 31, 2019, respectively; zero shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		—			—
Common stock, $0.0001 par value; 300,000,000 and 249,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 66,324,753 and 3,292,124 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		7			—
Additional paid-in capital		736,193			4,738
Accumulated other comprehensive income		211			74
Accumulated deficit		(231,341	)		(157,386	)
Total stockholders' equity (deficit)		505,070			(152,574	)
Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	595,070		$	220,529

The accompanying notes are an integral part of these condensed consolidated financial statements.

REVOLUTION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue:
Collaboration revenue, related party	$	12,661		$	12,506		$	34,232		$	37,953
Total revenue		12,661			12,506			34,232			37,953
Operating expenses:
Research and development		34,871			22,962			95,246			64,265
General and administrative		5,341			3,103			15,603			8,244
Total operating expenses		40,212			26,065			110,849			72,509
Loss from operations		(27,551	)		(13,559	)		(76,617	)		(34,556	)
Other income, net:
Interest income		347			766			1,986			1,571
Interest and other expense		(17	)		(25	)		(57	)		(83	)
Total other income, net		330			741			1,929			1,488
Loss before income taxes		(27,221	)		(12,818	)		(74,688	)		(33,068	)
Benefit from income taxes		—			—			733			—
Net loss	$	(27,221	)	$	(12,818	)	$	(73,955	)	$	(33,068	)
Redeemable convertible preferred stock dividends - undeclared and cumulative		—			(4,247	)		(2,219	)		(9,987	)
Net loss attributable to common stockholders	$	(27,221	)	$	(17,065	)	$	(76,174	)	$	(43,055	)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.42	)	$	(6.08	)	$	(1.49	)	$	(15.81	)
Weighted-average common shares used to compute net loss per share, basic and diluted		64,892,868			2,806,470			51,031,003			2,723,541

The accompanying notes are an integral part of these condensed consolidated financial statements.

REVOLUTION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(27,221	)	$	(12,818	)	$	(73,955	)	$	(33,068	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments, net		(80	)		69			137			54
Total comprehensive loss	$	(27,301	)	$	(12,749	)	$	(73,818	)	$	(33,014	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

REVOLUTION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share data)

(unaudited)

														Accumulated
	Redeemable Convertible											Additional		other						Total
	Preferred Stock						Common Stock					Paid-in		comprehensive			Accumulated			Stockholders'
	Shares			Amount			Shares			Amount		Capital		income			Deficit			Equity/(Deficit)
Balance at December 31, 2019		39,600,423		$	305,109			3,292,124		$	—	$	4,738	$	74		$	(157,386	)	$	(152,574	)
Conversion of redeemable convertible preferred stock into common stock		(39,600,423	)		(305,109	)		39,600,423			4		305,105		—			—			305,109
Issuance of common stock upon initial public offering, net of offering costs of $23,003		—			—			16,100,000			2		250,695		—			—			250,697
Issuance of common stock pursuant to stock option exercises		—			—			11,097			—		27		—			—			27
Vesting of early exercised stock options		—			—						—		47		—			—			47
Stock-based compensation expense		—			—			—			—		1,567		—			—			1,567
Net unrealized loss on marketable securities		—			—			—			—		—		(38	)		—			(38	)
Net loss		—			—			—			—		—		—			(19,519	)		(19,519	)
Balance at March 31, 2020		—		$	—			59,003,644		$	6	$	562,179	$	36		$	(176,905	)	$	385,316
Issuance of common stock pursuant to stock option exercises		—			—			21,578			—		86		—			—			86
Vesting of early exercised stock options		—			—			—			—		39		—			—			39
Repurchase of common stock								(9,354	)		—		—		—			—			—
Stock-based compensation expense		—			—			—			—		2,017		—			—			2,017
Net unrealized gain on marketable securities		—			—			—			—		—		255			—			255
Net loss		—			—			—			—		—		—			(27,215	)		(27,215	)
Balance at June 30, 2020		—		$	—			59,015,868		$	6	$	564,321	$	291		$	(204,120	)	$	360,498
Issuance of common stock pursuant to stock option exercises		—			—			415,291			—		1,390		—			—			1,390
Vesting of early exercised stock options		—			—			—			—		46		—			—			46
Repurchase of common stock		—			—			(6,406	)		—		—		—			—			—
Issuance of common stock upon follow-on offering, net of offering costs of $11,633		—			—			6,900,000			1		167,766		—			—			167,767
Stock-based compensation expense		—			—			—			—		2,670		—			—			2,670
Net unrealized loss on marketable securities		—			—			—			—		—		(80	)		—			(80	)
Net loss		—			—			—			—		—		—			(27,221	)		(27,221	)
Balance at September 30, 2020		—		$	—			66,324,753		$	7	$	736,193	$	211		$	(231,341	)	$	505,070

The accompanying notes are an integral part of these condensed consolidated financial statements.

REVOLUTION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share and per share data)

(unaudited)

												Accumulated
	Redeemable Convertible									Additional		other						Total
	Preferred Stock				Common Stock					Paid-in		comprehensive			Accumulated			Stockholders'
	Shares		Amount		Shares			Amount		Capital		income			Deficit			Equity/(Deficit)
Balance at December 31, 2018		29,595,909	$	205,081		3,208,924		$	—	$	1,300	$	—		$	(109,722	)	$	(108,422	)
Issuance of common stock pursuant to stock option exercises		—		—		3,766			—		14		—			—			14
Issuance of common stock pursuant to early exercised stock options		—		—		13,640			—		—		—			—			—
Vesting of early exercised stock options		—		—		—			—		27		—			—			27
Repurchases of early exercised stock		—		—		(1,948	)		—		—		—			—			—
Stock-based compensation expense		—		—		—			—		403		—			—			403
Net loss		—		—		—			—		—		—			(10,131	)		(10,131	)
Balance at March 31, 2019		29,595,909	$	205,081		3,224,382		$	—	$	1,744	$	—		$	(119,853	)	$	(118,109	)
Issuance of Series C redeemable convertible preferred stock for cash at $10.03 per share, net of issuance costs of $254		8,991,731		89,935		—			—		—		—			—			—
Issuance of common stock pursuant to stock option exercises		—		—		1,391			—		1		—			—			1
Issuance of common stock pursuant to early exercised stock options		—		—		5,998			—		—		—			—			—
Vesting of early exercised stock options		—		—		—			—		35		—			—			35
Repurchases of early exercised stock		—		—		(51,375	)		—		—		—			—			—
Stock-based compensation expense		—		—		—			—		506		—			—			506
Net unrealized loss on marketable securities		—		—		—			—		—		(15	)		—			(15	)
Net loss		—		—		—			—		—		—			(10,119	)		(10,119	)
Balance at June 30, 2019		38,587,640	$	295,016		3,180,396		$	—	$	2,286	$	(15	)	$	(129,972	)	$	(127,701	)
Issuance of Series C redeemable convertible preferred stock for cash at $10.03 per share, net of issuance costs		1,012,783		10,098