UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
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)
Warrants to purchase 0.1112 shares of common stock expiring 2026
RVMDW
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐No ☒
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, 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.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the Registrant included in the filing reflect the correction of an error to previously
issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the Registrant’s executive officers during
the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates of the Registrant as of June 30, 2024 (the last business day of the Registrant’s most recently completed second fiscal quarter) was
approximately $6.5 billion, based on the closing price of the Registrant’s common stock, as reported by the Nasdaq Global Select Market on June 30, 2024 of $38.81 per share.
The number of shares of the Registrant’s Common Stock outstanding on the Nasdaq Global Select Market as of February 21, 2025 was 185,913,326 (excluding 2,173,917 shares underlying pre-funded
warrants).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement relating to the Registrant’s 2025 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K
to the extent stated herein. The proxy statement will be filed with the Securities and Exchange Commission within 120 days of the Registrant’s fiscal year ended December 31, 2024.
i
Table of Contents
Page
PART I
3
Item 1.
Business
3
Item 1A.
Risk Factors
36
Item 1B.
Unresolved Staff Comments
84
Item 1C.
Cybersecurity
84
Item 2.
Properties
85
Item 3.
Legal Proceedings
85
Item 4.
Mine Safety Disclosures
86
PART II
87
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
87
Item 6.
[Reserved.]
88
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
89
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
100
Item 8.
Financial Statements and Supplementary Data
101
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
131
Item 9A.
Controls and Procedures
131
Item 9B.
Other Information
131
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
132
PART III
133
Item 10.
Directors, Executive Officers and Corporate Governance
133
Item 11.
Executive Compensation
133
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
133
Item 13.
Certain Relationships and Related Transactions, and Director Independence
133
Item 14.
Principal Accounting Fees and Services
133
PART IV
134
Item 15.
Exhibits, Financial Statement Schedules
134
Item 16.
Form 10-K Summary
137
Signatures
138
1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K 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. These statements involve known and unknown risks, uncertainties
and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by the 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;
•
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;
•
our expectations regarding the potential market size and size of the potential patient populations for our product candidates and any future
product candidates, if approved for commercial use;
•
our ability to maintain and establish new collaborations, licensing or other arrangements and the financial terms of any such agreements;
•
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;
•
our expectations regarding our ability to obtain, maintain, enforce and defend our intellectual property protection for our product candidates;
•
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; and
•
other risks and uncertainties, including those listed under the caption “Risk Factors.”
We have based these forward-looking statements largely on management’s current expectations, estimates, forecasts and projections about our business and
the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve
known and unknown risks, uncertainties and other factors that are in some cases beyond our control. These forward-looking statements speak only as of the
date of this Annual Report on Form 10-K and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors”
and elsewhere in this Annual Report on Form 10-K. 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. Except as required by applicable law, we do not plan to publicly update or revise any
2
forward-looking statements contained herein until after we distribute this Annual Report on Form 10-K, whether as a result of any new information, future
events or otherwise.
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 Annual Report on Form 10-K, 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
(ir.revmed.com), Securities and Exchange Commission (SEC) filings, webcasts, press releases and conference calls. We use these mediums, including our
website, to communicate with our members and public about our company, our products 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 on our website.
Summary of Material Risks Associated with Our Business
The principal risks and uncertainties affecting our business include the following:
•
We are a clinical-stage precision oncology company with a limited operating history and no products approved for commercial sale. We have
incurred significant losses since our inception. We expect to incur losses for at least the next several years and may never achieve or maintain
profitability, which, together with our limited operating history, makes it difficult to assess our future viability.
•
We have never generated revenue from product sales and may never be profitable.
•
We will require substantial additional financing to achieve our goals, which may not be available on acceptable terms, or at all. A failure to
obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization
efforts.
•
Our business is dependent on the successful development of our current and future product candidates. If we are unable to advance our
current or future product candidates through clinical trials, obtain marketing approval and ultimately commercialize any of our product
candidates, or we experience significant delays in doing so, our business will be materially harmed.
•
Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would
adversely affect our ability to obtain regulatory approvals or commercialize our product candidates on a timely basis or at all, which would
have an adverse effect on our business.
•
Historically, direct inhibition of any RAS protein has been challenging due to a lack of tractable, or “druggable,” binding pockets. Given this
approach is unproven, it may not be successful.
•
The results of preclinical studies and early-stage clinical trials may not be predictive of future results.
•
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise be
adversely affected.
•
We and our collaborators are currently developing and may in the future develop, our product candidates in combination with other therapies,
which exposes us to additional risks.
•
We face significant competition, and if our competitors develop and market products that are more effective, safer or less expensive than our
product candidates, our commercial opportunities will be negatively impacted.
•
If we and our collaborators are unable to obtain and maintain sufficient patent and other intellectual property protection for our product
candidates and technology, our competitors could develop and commercialize products and technology similar or identical to ours, and we
may not be able to compete effectively in our market or successfully commercialize any of our current or future product candidates.
The summary risk factors described above should be read together with the text of the full risk factors below in the section entitled “Risk Factors” and the
other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as in other
documents that we file with the SEC. The risks summarized above or described below are not the only risks that we face. Additional risks and uncertainties
not precisely known to us or that we currently deem to be immaterial may also materially and adversely affect our business, competitive position, financial
condition, results of operations, cash flows and growth prospects.
3
PART I
Item 1. Business.
Overview
We are a clinical-stage precision oncology company developing novel targeted therapies for RAS-addicted cancers. We possess sophisticated structure-
based drug discovery capabilities built upon deep chemical biology and cancer pharmacology know-how and innovative, proprietary technologies that
enable the creation of small molecules tailored to unconventional binding sites. Guided by our understanding of genetic drivers and adaptive resistance
mechanisms in cancer, we deploy precision medicine approaches to inform innovative monotherapy and combination regimens.
Our research and development pipeline comprises RAS(ON) inhibitors that bind directly to RAS variants, which we refer to as RAS(ON) Inhibitors, and
RAS companion inhibitors that target key nodes in the RAS pathway or associated pathways. Our RAS(ON) Inhibitors are designed to be used as
monotherapy, in combination with other RAS(ON) Inhibitors and/or in combination with RAS companion inhibitors or other therapeutic agents.
RAS(ON) Inhibitors
Our RAS(ON) Inhibitors are based on our proprietary tri-complex technology platform, which enables a highly differentiated approach to inhibiting the
active, GTP-bound form of RAS, which we refer to as RAS(ON). We are developing a portfolio of compounds that we believe were the first RAS(ON)
Inhibitors to use this mechanism of action. We believe that direct inhibitors of RAS(ON) suppress cell growth and survival and are less susceptible to
adaptive resistance mechanisms recognized for RAS(OFF) inhibitors.
We are evaluating our RAS(ON) Inhibitors alone and in combination with other drugs and investigational drug candidates, particularly in-pathway agents.
We believe tailored RAS(ON) Inhibitors will be useful to serve the diverse landscape of RAS-addicted cancers optimally. We believe that in some cases,
patients may experience maximal clinical benefit from the broad activity of our RAS(ON) multi-selective inhibitor, daraxonrasib (RMC-6236), if approved.
In others, we believe treatment with a RAS(ON) mutant-selective inhibitor may be optimal. We further believe that in some cases, it could be beneficial to
combine daraxonrasib with a RAS(ON) mutant-selective inhibitor, with daraxonrasib functioning as the backbone of these RAS(ON) Inhibitor doublets. In
addition, we believe that in some cases, combination of our RAS(ON) Inhibitors with standard of care therapies, including immunotherapies, may be
optimal.
We are advancing a deep pipeline of RAS(ON) Inhibitors, including daraxonrasib (RMC-6236), our RAS(ON) multi-selective inhibitor; elironrasib (RMC-
6291), our G12C-selective inhibitor; and zoldonrasib (RMC-9805), our G12D-selective inhibitor. Together, we consider these three clinical-stage
candidates as the first wave of RAS(ON) inhibitors that we are advancing through clinical development. We also currently plan to advance RMC-5127
(G12V) into clinical development. In addition, we have other preclinical-stage RAS(ON) inhibitor clinical development opportunities, including the
RAS(ON) mutant-selective inhibitors RMC-0708 (Q61H) and RMC-8839 (G13C).
Daraxonrasib (RMC-6236)
Daraxonrasib (RMC-6236), our RAS(ON) multi-selective inhibitor, is designed as an oral, RAS-selective tri-complex inhibitor of multiple RAS(ON)
variants containing cancer driver mutations at all three of the major RAS mutation hotspot positions (G12, G13 and Q61). Daraxonrasib inhibits all three
major RAS isoforms, suppressing the mutant cancer driver and cooperating wild-type RAS proteins.
A global, randomized Phase 3 registrational trial of daraxonrasib in the second-line (2L) treatment of patients with metastatic pancreatic ductal
adenocarcinoma (PDAC), which we call the RASolute 302 study, is ongoing. In the RASolute 302 study, we are randomizing patients in a 1:1 ratio to
receive either daraxonrasib at a dose of 300 mg daily or the investigator’s choice of chemotherapy. The RASolute 302 study has a nested trial design
allowing for a hierarchical sequence of statistical analysis, with patients with tumors harboring RAS G12X mutations serving as the core population which
will be tested first and all enrolled patients serving as the secondary population. We believe this nested design and hierarchical testing increases the
probability of trial success based on the core population while creating an opportunity to gain approval for a broader population. Patients in the RASolute
302 study will be evaluated for the dual primary endpoints of progression-free survival (PFS) and overall survival (OS) in the core population, with
secondary endpoints including PFS and OS in the secondary population and objective response rate (ORR) and quality of life measures. We currently
expect to substantially complete enrollment of the RASolute 302 study in 2025, to enable an expected clinical readout in 2026.
4
Having finalized the study protocol, we are now activating sites for a global, randomized Phase 3 registrational trial comparing daraxonrasib versus
docetaxel in patients with locally advanced or metastatic RAS-mutated non-small cell lung cancer (NSCLC) who have been treated with immunotherapy
and platinum-containing chemotherapy, which we call the RASolve 301 study. In the RASolve 301 study, we are randomizing patients in a 1:1 ratio to
receive either daraxonrasib or docetaxel. The RASolve 301 study has a nested trial design allowing for a hierarchical sequence of statistical analysis, with
patients with tumors harboring RAS G12X (other than G12C) mutations serving as the core population which will be tested first, and all enrolled patients
serving as the secondary population. We believe this nested design and hierarchical testing increases the probability of trial success based on the core
population while creating an opportunity to gain approval for a broader population. Patients in the RASolve 301 study will be evaluated for the dual
primary endpoints of PFS and OS in the core population, with secondary endpoints including PFS and OS in the secondary population and ORR and
quality of life measures.
We currently expect to initiate a global, randomized Phase 3 daraxonrasib monotherapy study in patients with first-line (1L) metastatic PDAC in the second
half of 2025. We also currently expect to initiate a global, randomized Phase 3 monotherapy study of daraxonrasib as adjuvant treatment for patients with
resectable PDAC in the second half of 2025.
On December 2, 2024 we reported updated clinical safety, tolerability, and activity data for daraxonrasib from our first-in-human monotherapy study of
daraxonrasib, which we refer to as the RMC-6236-001 study, in patients with previously treated RAS-mutant PDAC as of a data cutoff date of July 23,
2024. We believe these data showed that daraxonrasib was generally well tolerated and demonstrated encouraging antitumor activity that supported our
initiation of the RASolute 302 study.
Also on December 2, 2024, we reported clinical safety and tolerability data as of a September 30, 2024 data cutoff date for daraxonrasib from the RMC-
6236-001 study in patients with NSCLC with tumors harboring RAS mutations. We also reported clinical activity data as of a September 30, 2024 data
cutoff date for daraxonrasib from the RMC-6236-001 study in patients with NSCLC with tumors harboring RAS G12X mutations who had received one or
two prior lines of therapy which must have included prior immunotherapy and platinum chemotherapy administered either concurrently or sequentially, but
not docetaxel, a study population matching the planned RASolve 301 enrollees. We believe these data showed that daraxonrasib was generally well
tolerated and demonstrated encouraging antitumor activity that supported our initiation of the RASolve 301 study.
Based on our observations from the RMC-6236-001 study and our preclinical observations, we believe there is a potential opportunity to evaluate
daraxonrasib combinations in earlier lines of therapy in multiple tumor types, and we are currently evaluating several exploratory combination regimens
that include daraxonrasib in order to assess the potential for development in these settings. These combinations include daraxonrasib with pembrolizumab,
daraxonrasib with elironrasib, daraxonrasib with zoldonrasib and daraxonrasib with standard of care chemotherapy agents.
On December 2, 2024, we disclosed initial clinical safety and tolerability data as of a data cutoff date of October 28, 2024 from our clinical study of the
combination of daraxonrasib with pembrolizumab, which we believe showed the combination was generally well tolerated with limited hepatotoxicity.
Also on December 2, 2024, we disclosed initial clinical safety, tolerability and activity data as of a data cutoff date of October 28, 2024 from our clinical
study of the combination of daraxonrasib with elironrasib, which we believe showed the combination was generally well tolerated and provide initial
proof-of-mechanism for a RAS(ON) inhibitor doublet in patients with colorectal cancer (CRC) who were previously treated with KRAS(OFF) G12C
inhibitors. We believe these preliminary data observations support continued development of RAS(ON) inhibitor doublets in a broad range of tumor types
and earlier lines of therapy, including 1L patients with NSCLC carrying RAS G12C tumors.
In April 2024, at the American Association for Cancer Research (AACR) Annual Meeting 2024, we reported individual case studies from the RMC-6236-
001 study that showed examples of objective responses to daraxonrasib in patients with tumor types beyond PDAC or NSCLC, specifically patients with
melanoma and with CRC.
Elironrasib (RMC-6291)
Elironrasib (RMC-6291) is designed as a RAS(ON) oral tri-complex G12C-selective inhibitor. It is designed to exhibit subnanomolar potency for
suppressing RAS pathway signaling and growth of RAS G12C-bearing cancer cells and is engineered to be highly selective for RAS G12C over wild-type
RAS and other cellular targets. Elironrasib is designed to be differentiated from first-generation KRAS(OFF) G12C inhibitors, which sequester the
KRAS(OFF) G12C form, by its mechanism of directly inhibiting the RAS(ON) G12C form.
5
On October 13, 2023, we reported interim preliminary safety and anti-tumor data from our ongoing first-in-human study of elironrasib, which we refer to
as the RMC-6291-001 study, as of an October 5, 2023 data cut-off date, which we believe provide preliminary evidence of clinically meaningful
differentiation of elironrasib from KRAS(OFF) G12C inhibitors.
We are evaluating several exploratory combination regimens that include elironrasib in order to assess the potential for development in earlier lines of
therapy. These combinations include elironrasib with pembrolizumab and, as discussed in the “Daraxonrasib (RMC-6236)” section above, elironrasib with
daraxonrasib. We are also planning a combination study of elironrasib with both daraxonrasib and pembrolizumab.
On December 2, 2024, we disclosed initial clinical safety, tolerability and activity data for the combination of daraxonrasib with elironrasib, as discussed in
the “Daraxonrasib (RMC-6236)” section above.
Also on December 2, 2024, we disclosed clinical safety and tolerability data as of a data cutoff date of October 28, 2024 for the combination of elironrasib
with pembrolizumab, which we believe showed the combination was generally well tolerated with limited hepatotoxicity.
Zoldonrasib (RMC-9805)
Zoldonrasib (RMC-9805) is designed as a RAS(ON) oral tri-complex G12D-selective inhibitor. It is designed to exhibit low nanomolar potency for
suppressing RAS pathway signaling and growth of RAS G12D-bearing cancer cells and is engineered to covalently inactivate RAS G12D irreversibly.
On October 25, 2024, we reported preliminary clinical safety, tolerability and activity data as of a data cutoff date of September 2, 2024 from our first-in-
human monotherapy study of zoldonrasib, which we refer to as the RMC-9805-001 study in patients with previously treated solid tumors harboring KRAS
G12D mutations.
We believe that these data support our ongoing development of zoldonrasib as a single agent and in combination with other therapies, including with
daraxonrasib. An exploratory combination study of zoldonrasib with daraxonrasib is ongoing. We currently expect to disclose additional zoldonrasib
clinical safety and antitumor activity data in the second quarter of 2025.
We currently expect to initiate one or more pivotal combination studies in 2026 that incorporate either zoldonrasib or elironrasib and currently expect to
share clinical data supporting these plans in the second or third quarter of 2025.
RMC-5127
RMC-5127 is designed as a RAS(ON) oral G12V-selective inhibitor. It is designed to exhibit picomolar potency for suppressing RAS pathway signaling
and growth of RAS G12V-bearing cancer cells and is engineered for selective inhibition of RAS G12V over other RAS isoforms via non-covalent binding
interactions. We currently expect to advance RMC-5127 to a clinic-ready stage in 2025 and to initiate a first-in-human dose escalation clinical trial of
RMC-5127 in 2026.
RMC-0708
RMC-0708 is designed as a RAS(ON) oral Q61H-selective inhibitor. It is designed to exhibit picomolar potency for suppressing RAS pathway signaling
and growth of RAS Q61H-bearing cancer cells and is engineered for selective inhibition of RAS Q61H over other RAS isoforms via non-covalent binding
interactions. Clinical development of RMC-0708 is subject to our continuing assessment of our portfolio priorities.
RMC-8839
RMC-8839 is designed as a RAS(ON) oral G13C-selective inhibitor. It is designed to exhibit picomolar potency for suppressing RAS pathway signaling
and growth of KRAS G13C-bearing cancer cells and is engineered to covalently inactivate KRAS G13C for irreversible inhibition. Clinical development of
RMC-8839 is subject to our continuing assessment of our portfolio priorities.
Other Development Opportunities
We have developed RAS companion inhibitors that are designed to suppress cooperating targets and pathways that sustain RAS-addicted cancers. These
compounds include RMC-4630, which is designed as a potent and selective inhibitor of SHP2; RMC-5552, which is designed as a selective inhibitor of
mTORC1 signaling in tumors; and RMC-5845, which is designed to target SOS1 a protein
6
that plays a key role in converting RAS(OFF) to RAS(ON) in cells. Additional clinical development of our RAS companion inhibitors is subject to our
continuing assessment of our portfolio priorities.
We are also developing preclinical next-generation programs that are designed to sustain our innovation platform beyond our current development-stage
assets.
Our Strategy
Overview
Our goal is to revolutionize treatment for patients with RAS-addicted cancers through the discovery, development and delivery of innovative, targeted
medicines. RAS proteins drive a significant number of human cancers, and are largely unserved by targeted therapeutics. The KRAS G12C mutation has
been clinically validated as a therapeutic target, and the evidence is strong that numerous other oncogenic mutations in the RAS family of proteins are
likewise compelling cancer targets. Our collection of RAS(ON) Inhibitors is tailored to target RAS mutations that together comprise the driver mutations in
the vast majority of RAS-addicted cancers.
Our RAS(ON) Inhibitors are unique in that they are the first RAS inhibitors in clinical development to specifically target the activated, or ON, form of
oncogenic RAS proteins. This differentiated mechanism of action offers potential improvements over that of the first RAS inhibitors to gain U.S. Food and
Drug Administration (FDA) approval (KRAS G12C inhibitors sotorasib and adagrasib), which interact exclusively with the OFF form. Based on an
emerging understanding of the limitations of first-generation RAS(OFF) drugs in the clinic and findings from our own preclinical research, we believe our
RAS(ON) Inhibitors have the potential to deliver deeper antitumor activity and more durable clinical benefit to a broader patient population.
Our pipeline of RAS(ON) multi-selective and RAS(ON) mutant-selective inhibitors offer an opportunity for RAS(ON) doublet combinations designed to
potentially maximize durable clinical benefit by effectively targeting the most common KRAS mutant variants in cancer. The consistent finding from the
first-generation mutant-selective RAS inhibitors is that the main resistance mechanism that curtails durable efficacy is through reactivation of RAS
pathway, highlighting the oncogenic addiction in RAS-mutated cancers. We believe many of these resistance mechanisms may be amenable to inhibition
with a RAS(ON) multi-selective inhibitor. The pairing of the RAS(ON) multi-selective inhibitor daraxonrasib with a mutant-selective inhibitor (such as
elironrasib or zoldonrasib) may address potential resistances which may ultimately translate to more durable clinical benefit. In addition, our experiments
have shown that two inhibitors generally result in more effective inhibition of the primary mutant RAS driver than either inhibitor alone. These doublets
form a core part of our strategy to improve the standard of care for patients with RAS-addicted cancers, along with monotherapy and combination with
standard of care therapies. This approach is based on our biological understanding of RAS addiction and leverages the unique nature of our pipeline.
Our current corporate priorities are to:
•
Execute pivotal trials with daraxonrasib monotherapy in patients with previously treated metastatic PDAC and NSCLC.
•
Advance daraxonrasib into earlier-line randomized pivotal trials in patients with PDAC.
•
Generate sufficient data to inform development priorities for elironrasib and zoldonrasib and prepare to initiate one or more pivotal trials
including these compounds either as monotherapy or in a drug combination.
•
Progress our earlier-stage pipeline, including advancing next-generation innovations from the company’s highly productive discovery
organization.
•
Grow our commercial and operational capabilities and increase precommercial activities in support of a potential commercial launch.
RAS Mutant Epidemiology in the United States.
Variants in RAS proteins account for a significant number of human cancers in the United States, many of which are fatal. Diverse oncogenic RAS variants
in three different RAS isoforms (KRAS, NRAS and HRAS) drive distinct human cancers. Based on tumor mutation frequencies from Foundation Medicine
data, scaled to estimated patient numbers using cancer incidence from the American Cancer Society (ACS) Cancer Facts and Figures 2023, there are
estimated to be more than 200,000 RAS-mutant cancer diagnoses each year in the United States, including approximately 60,000 NSCLC diagnoses
(approximately 30% of NSCLC diagnoses), approximately 75,000 CRC diagnoses (approximately 50% of CRC diagnoses) and approximately 56,000
PDAC diagnoses (more than 90% of PDAC diagnoses).
7
Our Innovation Engine
We have built an innovation engine that enables us to discover and develop novel targeted therapies for elusive high-value frontier cancer targets with a
particular focus on a cohesive set of disease targets within notorious growth and survival pathways. This engine is centered around our proprietary tri-
complex platform and is bolstered by three complementary pillars:
•
Deep chemical biology and cancer pharmacology know-how, including assays and proprietary tool compounds, to define the critical
vulnerabilities of “frontier” RAS and related pathway targets, associated signaling circuits in cancer cells and immune system targets;
•
Sophisticated structure-based drug discovery capabilities, including proven access to complex chemical space, to create drug candidates
tailored to unconventional binding sites on elusive cancer targets; and
•
Astute precision medicine approach, embracing patient selection and innovative single agent and combination drug regimens, to translate our
preclinical insights into clinical benefit for patients with RAS-addicted cancers.
Our Tri-Complex Platform
Our proprietary tri-complex technology enables us to discover small molecule inhibitors of targets lacking intrinsic drug binding sites by inducing new
druggable pockets. This occurs through small molecule-driven formation of a high affinity ternary complex (tri-complex) between the target protein, the
small molecule, and a widely expressed cytosolic protein called a chaperone (e.g., cyclophilin A or FKPB12). This platform technology is the foundation of
our RAS(ON) Inhibitor programs. In this context, the inhibitory effect of tri-complex formation on the RAS(ON) target is mediated by steric occlusion of
the site where RAS(ON) binds its downstream effector molecules, such as RAF, which are required for propagating the oncogenic signal. Thus, tri-
complex formation with RAS(ON) targets disrupts RAS effector binding and terminates oncogenic signaling. Our RAS(ON) tri-complex inhibitors, which
are inspired by natural products, are “Beyond Rule of 5” compounds.
Pipeline
Our pipeline is summarized below:
RAS(ON) Inhibitor Data
Daraxonrasib (RMC-6236)
Daraxonrasib (RMC-6236), our RAS(ON) multi-selective inhibitor, is designed as a potent, oral, RAS-selective tri-complex inhibitor of multiple RAS(ON)
variants including cancer drivers at all three of the major mutation hotspot positions, G12, G13, and Q61.
8
Daraxonrasib inhibits all three major RAS isoforms, suppressing the mutant cancer driver and cooperating wild-type RAS proteins. Daraxonrasib is being
evaluated in the RMC-6236-001 study, an ongoing monotherapy dose-escalation Phase 1/1b clinical study in patients with KRAS G12-mutated tumors,
focused on NSCLC, PDAC and CRC.
Daraxonrasib PDAC Monotherapy
On October 23, 2024 we reported updated clinical safety, tolerability, and activity data for daraxonrasib at a dose levels ranging from 160 mg daily to 300
mg daily, from the RMC-6236-001 study in patients with previously treated RAS-mutant PDAC as of a data cutoff date of July 23, 2024 (the PDAC Data
Cutoff Date). Daraxonrasib was generally well tolerated in these patients. As of the PDAC Data Cutoff Date, the median PFS for these patients treated with
daraxonrasib in the 2L setting with tumors harboring KRAS G12X mutations was 8.5 months (95% confidence interval (CI): 5.3 – 11.7 months), and the
median OS was 14.5 months (95% CI: 8.8 months, not estimable (NE)).
On December 2, 2024 we reported updated clinical safety, tolerability, and activity data for daraxonrasib at a dose level of 300 mg daily, from the RMC-
6236-001 study in patients with previously treated RAS-mutant PDAC as of the PDAC Data Cutoff Date.
In the RMC-6236-001 study, a total of 76 patients with PDAC treated with a dose of 300 mg of daraxonrasib daily were evaluated for safety and
tolerability as of the PDAC Data Cutoff Date (Table 1). The most common treatment-related adverse events (TRAEs) that were observed were rash and
gastrointestinal (GI)-related toxicities. One Grade 4 TRAE (platelet count decreased) was observed, and no Grade 5 TRAEs were observed.
9
Table 1. RMC-6236-001: TRAEs and TRAEs leading to dose modifications in patients with PDAC treated with daraxonrasib at 300 mg daily
(N=76)
Maximum Severity of TRAEs
Any Grade
Grade ≥3
Any TRAE
73 (96%)
26 (34%)
TRAEs occurring in≥10% of patients, n (%)
Rash
69 (91%)
6 (8%)
Diarrhea
40 (53%)
3 (4%)
Nausea
29 (38%)
0 (0%)
Vomiting
27 (36%)
0 (0%)
Stomatitis
26 (34%)
3 (4%)
Mucosal inflammation
13 (17%)
1 (1%)
Fatigue
12 (16%)
1 (1%)
Decreased appetite
10 (13%)
0 (0%)
Paronychia
10 (13%)
0 (0%)
Oedema peripheral
10 (13%)
0 (0%)
Platelet count decreased
8 (11%)
3 (4%)
Dry skin
8 (11%)
0 (0%)
Other select TRAEs, n (%)
Anemia
6 (8%)
5 (7%)
ALT increased
5 (7%)
3 (4%)
Neutrophil count decreased
5 (7%)
2 (3%)
AST increased
4 (5%)
1 (1%)
TRAEs leading to dose modification, n (%)
32 (42%)
Dose interruption
30 (40%)
Dose reduction
19 (25%)
TRAEs leading to dose discontinuation, n (%)
0 (0%)
Specific TRAEs leading to dose reduction in >10% patients, n (%)
Rash
10 (13%)
Mean dose intensity
89%
Data Cutoff Date of July 23, 2024
1 Includes preferred terms of dermatitis, dermatitis acneiform, eczema, erythema, rash, rash erythematous, rash maculopapular, rash pruritic and rash pustular; multiple types of rash may have
occurred in the same patient.
2 No prophylaxis for nausea or vomiting was administered.
3 Includes preferred terms of dermatitis acneiform, rash, and rash maculopapular.
Median duration of treatment was 5.2 months.
ALT, alanine transaminase; AST, aspartate transferase.
We also reported best percentage change in tumor size from baseline for patients with metastatic PDAC with tumors harboring KRAS G12X mutations
treated with a dose of 300 mg daily in the 2L setting as of the PDAC Data Cutoff Date (Figure 1). The ORR for patients who received the first dose of
daraxonrasib at least 14 weeks prior to the PDAC Data Cutoff Date was 36% (8 of 22 patients) for patients with tumors harboring KRAS G12X mutations
and was 27% (10 of 37 patients) for patients with tumors harboring G12X, G13X or Q61X mutations.
1
2
2
3
10
Figure 1. RMC-6236-001: Best percentage change in tumor size from baseline in patients with PDAC treated in the 2L setting with daraxonrasib at 300
mg daily
Data Cutoff Date of July 23, 2024
KRAS G12X mutation includes any KRAS mutation where glycine (G) at position 12 is substituted by another amino acid. RAS Other includes mutations in KRAS G13X, KRAS Q61X or
mutations in HRAS or NRAS at codons G12X, G13X or Q16X. Among patients with a response (confirmed or unconfirmed), 46% of first response occurred within 2 months of RMC-6236
treatment. 2L in the metastatic setting includes patients who progressed on prior therapy in an earlier setting within 6 months of last dose. ORR analyses included all patients who received first
dose of daraxonrasib at least 14 weeks prior to the PDAC Data Cutoff Date (to allow 2 potential scans). Unconfirmed PRs (PR*) with treatment discontinued (will never confirm) were not
considered responders but remained in the denominator; ORR (by RECIST v1.1) included confirmed CRs/PRs and unconfirmed CRs/PRs who were still on treatment and may yet be confirmed.
One patient included in the denominator of the ORR analyses is not displayed on waterfall due to lack of post-baseline target lesion assessment (patient withdrew consent).
CR, complete response; PD, progressive disease; PR, partial response; RECIST, Response Evaluation Criteria in Solid Tumors; SD, stable disease; SOD, sum of diameters.
In addition, we reported preliminary PFS data as of the PDAC Data Cutoff Date for patients with metastatic PDAC treated with a dose of 300 mg daily in
the 2L setting (Figure 2). As of the PDAC Data Cutoff Date, the median PFS for patients with tumors harboring KRAS G12X mutations was 8.8 months
(95% CI: 8.5, NE), and for patients with tumors harboring G12X, G13X or Q61X mutations was 8.5 months (95% CI: 5.9, NE).
11
Figure 2. RMC-6236-001: Interim PFS in 2L metastatic PDAC patients treated with daraxonrasib at 300 mg daily
Data Cutoff Date of July 23, 2024
RAS Mutant defined as patients with G12X, G13X or Q61X PDAC.
2L in the metastatic setting includes patients who progressed on prior therapy in an earlier setting within 6 months of last dose.
Median follow-up is 6.1 months and 6.6 months for KRAS G12X and RAS Mutant in the 2L setting at 300 mg, respectively.
We also reported preliminary OS data as of the PDAC Data Cutoff Date for patients with metastatic PDAC treated with a dose of 300 mg daily in the 2L
setting (Figure 3). The median OS as of the PDAC Data Cutoff Date for patients with tumors harboring KRAS G12X mutations was not estimable (95%
CI: NE, NE) and for patients with tumors harboring G12X, G13X or Q61X mutations was also not estimable (95% CI: 8.5 months, NE). As of the PDAC
Data Cutoff Date, the OS rate at 6 months was 100% (95% CI: 100%, 100%) for patients with tumors harboring KRAS G12X mutations and was 97%
(95% CI: 79%, 100%) for patients with tumors harboring G12X, G13X or Q61X mutations.
12
Figure 3. RMC-6236-001: Interim OS in 2L PDAC patients treated with daraxonrasib at 300 mg daily
Data Cutoff Date of July 23, 2024
RAS Mutant defined as patients with G12X, G13X or Q61X PDAC.
2L in the metastatic setting includes patients who progressed on prior therapy in an earlier setting within 6 months of last dose.
Median follow-up is 6.1 months and 6.6 months for KRAS G12X and RAS Mutant, respectively.
OS rate at 6 months and 95% CI are from Kaplan-Meier analysis.
Daraxonrasib NSCLC Monotherapy
On December 2, 2024, we also reported updated clinical safety, tolerability, and activity data for daraxonrasib from the RMC-6236-001 study, as of a data
cutoff date of September 30, 2024 (the NSCLC Data Cutoff Date) in patients with RAS-mutant NSCLC.
In the RMC-6236-001 study, a total of 124 patients with NSCLC treated across dose cohorts ranging from 120 mg daily to 300 mg daily were evaluated for
safety and tolerability as of the NSCLC Data Cutoff Date (Table 2). We believe that these data show that daraxonrasib was generally well tolerated at dose
levels between 120 mg daily and 220 mg daily, with an increase in the rate of TRAEs observed at the 300 mg daily dose level. One Grade 4 TRAE
(pneumonitis) was observed at the 300 mg daily dose level. No Grade 5 TRAEs were observed. We also reported the TRAEs leading to dose modifications
for patients with NSCLC treated across dose cohorts ranging from 120 mg daily to 300 mg daily as of the NSCLC Data Cutoff Date. For patients treated
across dose cohorts ranging from 120 mg daily to 220 mg daily, the median treatment duration was 5.5 months, and the median cumulative duration of
dose interruption was 8.5 days.
13
Table 2. RMC-6236-001: TRAEs and TRAEs leading to dose modifications in patients with NSCLC treated with daraxonrasib across dose cohorts ranging
from 120 mg daily to 300 mg daily
120 mg to 300 mg
(N=124)
120-220 mg
(N = 73)
300 mg
(N = 51)
Any Grade
Grade ≥3
Any Grade
Grade ≥3
Any Grade
Grade ≥3
Any TRAE
121 (98%)
33 (27%)
71 (97%)
12 (16%)
50 (98%)
21 (41%)
TRAEs occurring in ≥10% of patients, n (%)
Rash
110 (89%)
9 (7%)
66 (90%)
5 (7%)
44 (86%)
4 (8%)
Diarrhea
87 (70%)
10 (8%)
46 (63%)
1 (1%)
41 (80%)
9 (18%)
Nausea
68 (55%)
0 (0%)
36 (49%)
0 (0%)
32 (63%)
0 (0%)
Vomiting
55 (44%)
3 (2%)
29 (40%)
2 (3%)
26 (51%)
1 (2%)
Stomatitis
47 (38%)
3 (2%)
25 (34%)
0 (0%)
22 (43%)
3 (6%)
Paronychia
26 (21%)
0 (0%)
14 (19%)
0 (0%)
12 (24%)
0 (0%)
Fatigue
20 (16%)
0 (0%)
8 (11%)
0 (0%)
12 (24%)
0 (0%)
Dry skin
19 (15%)
0 (0%)
9 (12%)
0 (0%)
10 (20%)
0 (0%)
AST increased
17 (14%)
2 (2%)
11 (15%)
0 (0%)
6 (12%)
2 (4%)
ALT increased
15 (12%)
3 (2%)
10 (14%)
0 (0%)
5 (10%)
3 (6%)
Decreased appetite
14 (11%)
0 (0%)
4 (6%)
0 (0%)
10 (20%)
0 (0%)
Dysgeusia
12 (10%)
0 (0%)
3 (4%)
0 (0%)
9 (18%)
0 (0%)
Other select TRAEs, n (%)
Anemia
9 (7%)
3 (2%)
4 (6%)
2 (3%)
5 (10%)
1 (2%)
TRAEs leading to dose modification, n (%)
64 (52%)
30 (41%)
34 (67%)
Dose interruption
59 (48%)
25 (34%)
34 (67%)
Dose reduction
34 (27%)
15 (21%)
19 (37%)
TRAEs leading to dose discontinuation, n (%)
7 (6%)
3 (4%)
4 (8%)
TRAEs leading to dose reductions in ≥ 10% patients, n (%)
Diarrhea
12 (10%)
4 (6%)
8 (16%)
Rash
13 (11%)
6 (8%)
7 (14%)
Mucositis/stomatitis
6 (5%)
1 (1%)
5 (10%)
Mean dose intensity
81%
88%
72%
Data Cutoff Date of September 30, 2024
One Grade 4 pneumonitis (possibly related) observed at 300 mg daily dose level in patient with concomitant pneumocystis pneumonia. No other Grade 4 TRAEs were observed. No Grade 5
TRAEs were observed.
1 Includes preferred terms of rash pustular, rash papular, rash maculopapular, rash macular, rash, erythema, and dermatitis acneiform. Multiple types of rash may have occurred in the same
patient.
We also reported best percentage change in tumor size from baseline for patients with NSCLC with tumors harboring RAS G12X mutations who had
received one or two prior lines of therapy, which must have included prior immunotherapy and platinum chemotherapy administered either concurrently or
sequentially, but did not include docetaxel, who were treated with RMC-6236 across dose cohorts ranging from 120 mg daily to 220 mg daily (NSCLC
Efficacy-Evaluable Patients) (Figure 4). The ORR for NSCLC Efficacy-Evaluable Patients who received the first dose of RMC-6236 at least 14 weeks
prior to the NSCLC Data Cutoff Date was 38% (15 of 40 patients).
1
1
14
Figure 4. RMC-6236-001: Best percentage change in tumor size from baseline in NSCLC Efficacy-Evaluable Patients
Data Cutoff Date of September 30, 2024
Population includes patients with RAS G12X mutant NSCLC who have received 1 or 2 prior lines of therapy, which must have included prior immunotherapy and platinum chemotherapy
administered either concurrently or sequentially, and have not received docetaxel previously. Adjuvant therapy or multimodal therapy with curative intent is considered prior therapy if disease
progression occurred or treatment completion was within 6 months of first dose of daraxonrasib.
Among patients with a response (confirmed or unconfirmed), 65% of first response occurred within 2 months of daraxonrasib treatment.
ORR analyses included all patients who received first dose of daraxonrasib at least 14 weeks prior to data cutoff date (to allow 2 potential scans).
ORR (by RECIST v1.1) included confirmed CRs/PRs and unconfirmed CRs/PRs who were still on treatment and may yet be confirmed; unconfirmed PRs (PR*) with treatment discontinued (will
never confirm) were not considered responders but remained in the denominator. Three patients included in the denominator of the ORR analyses are not displayed on waterfall due to lack of
post-baseline target lesion assessment (2 due to patient request to withdraw from treatment, and 1 due to patient withdrawal of consent); patient with 100% reduction in SOD from baseline was
deemed as PD due to new lesion, treatment is ongoing post progression.
CR, complete response; NE, not evaluable; PD, progressive disease; PR, partial response; RECIST, Response Evaluation Criteria in Solid Tumors; SD, stable disease; SOD, sum of diameter;
DCR, disease control rate.
In addition, we reported preliminary PFS data as of the NSCLC Data Cutoff Date for NSCLC-Evaluable Patients (Figure 5). As of the NSCLC Data Cutoff
Date, the median PFS for NSCLC Efficacy-Evaluable Patients was 9.8 months (95% CI: 6.0, 12.3).
15
Figure 5. RMC-6236-001: Interim PFS in NSCLC Efficacy-Evaluable Patients
Data Cutoff Date of September 30, 2024
Population includes patients with RAS G12X mutant NSCLC who have received 1 or 2 prior lines of therapy, which must include prior immunotherapy and platinum chemotherapy
administered either concurrently or sequentially, and have not received docetaxel previously. Adjuvant therapy or multimodal therapy with curative intent is considered prior therapy if
disease progression occurred or treatment completion was within 6 months of first dose of daraxonrasib.
Median follow-up is 10.8 months.
We also reported interim OS data as of the NSCLC Data Cutoff Date for NSCLC Efficacy-Evaluable Patients (Figure 6). As of the NSCLC Data Cutoff
Date, the median OS for NSCLC Efficacy-Evaluable Patients was 17.7 months (95% CI: 13.7, NE).
16
Figure 6. RMC-6236-001: Interim OS in NSCLC Efficacy-Evaluable Patients
Data Cutoff Date of September 30, 2024
Population includes patients with RAS G12X mutant NSCLC who have received 1 or 2 prior lines of therapy, which must include prior immunotherapy and platinum chemotherapy administered
either concurrently or sequentially, and have not received docetaxel previously. Adjuvant therapy or multimodal therapy with curative intent is considered prior therapy if disease progression
occurred or treatment completion was within 6 months of first dose of daraxonrasib.
Median follow-up is 10.8 months.
We believe these preliminary data observations from the RMC-6236-001 study as of the NSCLC Data Cutoff Date for NSCLC Efficacy-Evaluable Patients
support the initiation of RASolve 301, our global, randomized Phase 3 trial comparing daraxonrasib against docetaxel in patients with RAS-mutated
NSCLC who have been treated with one or two prior lines of therapy, which must have included immunotherapy or platinum chemotherapy.
Other Daraxonrasib Monotherapy
At the AACR Annual Meeting 2024, we reported individual case studies from the RMC-6236-001 study that showed examples of objective responses to
daraxonrasib in patients with tumor types beyond PDAC or NSCLC, specifically patients with melanoma and with CRC. We believe that these
observations may support further development opportunities for daraxonrasib.
Daraxonrasib with Pembrolizumab Combination
On December 2, 2024, we reported that, based on the initial observations of 20 previously treated patients in our RMC-LUNG-101 Phase 1b clinical study,
as of a data cutoff date of October 28, 2024, the combination of daraxonrasib at a dose level of 200 mg daily with pembrolizumab at the standard dose level
of 200 mg once every three weeks was generally well tolerated. TRAEs of Grade 1 aspartate aminotransferase (AST) elevation were reported in two
patients (10%) and a TRAE of Grade 2 AST elevation was reported in one patient (5%). A TRAE of Grade 1 alanine transaminase (ALT) elevation was
reported in one patient (5%), and a TRAE of
17
Grade 3 ALT elevation was reported in one patient (5%). We believe these observations support continued evaluation of the combination of daraxonrasib
with pembrolizumab in NSCLC patients in the 1L setting.
Daraxonrasib with Elironrasib Combination
On December 2, 2024, we reported clinical safety and tolerability data for the combination of daraxonrasib at dose levels ranging from 100 mg daily to 300
mg daily with elironrasib (RMC-6291), our RAS(ON) oral tri-complex G12C inhibitor, at dose levels of 100 mg and 200 mg twice daily, from our RMC-
6291-101 Phase 1b clinical study, which we refer to as the RMC-6291-101 study, as of a data cutoff date of October 28, 2024 (the
Daraxonrasib/Elironrasib Data Cutoff Date) in patients with advanced RAS G12C mutant solid tumors.
In the RMC-6291-101 study, a total of 74 patients were evaluated for safety and tolerability as of the Daraxonrasib/Elironrasib Data Cutoff Date (Table 3).
The combination of daraxonrasib with elironrasib was generally well tolerated across all dose levels tested. One Grade 4 TRAE (hypokalemia), which led
to dose interruption, was associated with Grade 3 diarrhea. No Grade 5 TRAEs were observed.
Table 3. RMC-6291-101: TRAEs and TRAEs leading to dose modifications in patients treated with the combination of daraxonrasib and elironrasib
All Dose Levels (N=74)
Maximum Severity of TRAEs
Grade 1
Grade 2
Grade 3
Grade 4
Any Grade
Any TRAE
14 (19%)
26 (35%)
16 (22%)
1 (1%)
57 (77%)
TRAEs occurring in≥10% of patients, n (%)
Rash
21 (28%)
23 (31%)
4 (5%)
0 (0%)
48 (65%)
Diarrhea
23 (31%)
10 (14%)
1 (1%)
0 (0%)
34 (46%)
Nausea
17 (23%)
7 (10%)
0 (0%)
0 (0%)
24 (32%)
Vomiting
18 (24%)
6 (8%)
0 (0%)
0 (0%)
24 (32%)
Mucositis/Stomatitis
8 (11%)
9 (12%)
1 (1%)
0 (0%)
18 (24%)
Fatigue
8 (11%)
2 (3%)
3 (4%)
0 (0%)
13 (18%)
Anemia
4 (5%)
4 (5%)
2 (3%)
0 (0%)
10 (14%)
ALT increased
3 (4%)
6 (8%)
0 (0%)
0 (0%)
9 (12%)
AST increased
4 (5%)
3 (4%)
1 (1%)
0 (0%)
8 (11%)
Other select TRAEs, n (%)
Electrocardiogram QT prolonged
0 (0%)
0 (0%)
2 (3%)
0 (0%)
2 (3%)
TRAEs leading to dose interruption of any study drug, n (%)
0 (0%)
12 (16%)
9 (12%)
1 (1%)
22 (30%)
TRAEs leading to dose reduction of any study drug, n (%)
1 (1%)
4 (5%)
2 (3%)
0 (0%)
7 (10%)
TRAEs leading to treatment discontinuation of any study drug, n (%)
0 (0%)
0 (0%)
2 (3%)
0 (0%)
2 (%)
Data Cutoff Date of October 28, 2024
Median duration of treatment was 2.3 months.
The mean dose intensities for elironrasib and daraxonrasib were 95% and 92%, respectively.
1 Rash bundled term includes dermatitis acneiform, rash maculopapular, rash, rash pustular, and erythema.
ALT, alanine transaminase; AST, aspartate transferase.
We also reported best percentage change in tumor size from baseline for patients from the RMC-6291-101 study with CRC who were previously treated
with a KRAS(OFF) G12C inhibitor as of the Daraxonrasib/Elironrasib Data Cutoff Date (Figure 7). The ORR for patients who received the first dose of
study drugs at least 8 weeks prior to the Daraxonrasib/Elironrasib Data Cutoff Date was 25% (3 of 12 patients), including one patient with an unconfirmed
complete response, and the disease control rate (DCR) was 92% (11 of 12 patients). As reference values, we also reported that the ORR for patients with
CRC treated with daraxonrasib monotherapy at a dose of 300 mg daily in the RMC-6236-001 study as of a data cutoff date of September 30, 2024 was 9%
(2 of 22 patients), and the ORR for patients with CRC previously treated with a KRAS(OFF) G12C inhibitor who were subsequently treated with
elironrasib monotherapy at a dose of 200 mg twice daily in the RMC-6291-001 study as of a data cutoff date of October 28, 2024 was 0% (0 of 6 patients).
1
18
Figure 7. RMC-6291-101: Best percentage change in tumor size from baseline in patients with CRC who were previously treated with a KRAS(OFF) G12C
inhibitor
Data Cutoff Date of October 28, 2024
ORR and DCR (CR+PR+SD) analyses include all patients who received first dose of study drug(s) at least 8 weeks prior to the data cutoff date (to allow 1 potential scan). Unconfirmed PRs
(PR*) with treatment discontinued (will never confirm) were not considered responders but included in the denominator; ORR (by RECIST v1.1) included confirmed CRs/PRs and unconfirmed
CRs/PRs who were still on treatment and may yet be confirmed. Two patients with 8 weeks follow up do not appear in waterfall due to one patient with no tumor assessment entered in database
and one patient with missing target lesion measurements (overall response entered as SD). One patient with CR* has confirmed PR.
SOD, sum of diameters; SD, stable disease; CR, complete response; CR*, unconfirmed complete response; PR, partial response; PR*, unconfirmed PR; RECIST, Response Evaluation Criteria in
Solid Tumors.
We believe these preliminary clinical safety and antitumor activity data provide initial proof-of-mechanism for a RAS(ON) Inhibitor doublet in patients
previously treated with a KRAS(OFF) G12C inhibitor CRC patients and that they support continued development of our RAS(ON) Inhibitor doublets in a
broad range of tumor types and earlier lines of therapy.
Elironrasib (RMC-6291)
Elironrasib (RMC-6291) is designed as a RAS(ON) oral G12C-selective inhibitor. It is designed to exhibit subnanomolar potency for suppressing RAS
pathway signaling and growth of RAS G12C-bearing cancer cells and is engineered to be highly selective for RAS G12C over wild-type RAS and other
cellular targets. Elironrasib is designed to be differentiated from first-generation KRAS(OFF) G12C inhibitors, which sequester the KRAS(OFF) G12C
form, by its potential mechanism of directly inhibiting the RAS(ON) G12C form. We believe direct inhibition of the ON form offers important biological
advantages, including more rapid termination of RAS signaling and more robust inhibition in the face of known resistance mechanisms.
Elironrasib Monotherapy
A monotherapy dose-escalation Phase 1b study of elironrasib, which we refer to as the RMC 6291-001 study, is ongoing.
On October 13, 2023, we reported interim preliminary safety and anti-tumor data from the RMC-6291-001 study as of an October 5, 2023 data cut-off date.
The data demonstrated that elironrasib was generally well tolerated across dose levels. These data also
19
demonstrated preliminary evidence of clinical activity in patients with KRAS G12C NSCLC previously treated with, or naïve to, a KRAS(OFF) G12C
inhibitor and preliminary evidence of clinical activity in patients with KRAS G12C CRC who had not been previously treated with a KRAS(OFF) G12C
inhibitor. We observed that elironrasib was orally bioavailable and demonstrated dose-dependent pharmacokinetics and that reduction in ctDNA of the
KRAS G12C allele across doses was correlated with clinical activity. We believe these data provided preliminary evidence of clinically meaningful
differentiation of elironrasib from KRAS(OFF) G12C inhibitors.
Daraxonrasib with Elironrasib Combination
See “Daraxonrasib (RMC-6236) – Daraxonrasib with Elironrasib Combination” above.
Elironrasib with Pembrolizumab Combination
On December 2, 2024, based on the initial observations of 15 patients in our RMC-LUNG-101 Phase 1b clinical study, as of a data cutoff date of October
28, 2024, we reported that the combination of elironrasib at a dose level of 200 mg twice daily with pembrolizumab at the standard dose level of 200 mg
once every three weeks was generally well tolerated. A TRAE of Grade 1 AST elevation was reported in one patient (7%) and a TRAE of Grade 1 ALT
elevation was reported in one patient (7%). There were no TRAEs of Grade 2 or higher AST or ALT elevations reported. We believe these observations,
together with its observations reported above from the combination of daraxonrasib with elironrasib and the combination of daraxonrasib with
pembrolizumab, support exploration of the triplet combination of elironrasib, daraxonrasib, and pembrolizumab, which we believe has the potential to
provide a chemotherapy-sparing option for patients with NSCLC in the 1L setting.
Zoldonrasib (RMC-9805)
Zoldonrasib (RMC-9805) is designed as a RAS(ON) oral G12D-selective inhibitor. It is designed to exhibit low nanomolar potency for suppressing RAS
pathway signaling and growth of RAS G12D-bearing cancer cells and is engineered to covalently inactivate RAS G12D for irreversible inhibition. To our
knowledge, zoldonrasib is the first drug candidate that covalently modified an aspartic acid residue in preclinical studies.
The RMC-9805-001 study, a monotherapy dose-escalation Phase 1/1b trial of RMC-9805, is ongoing. We have identified 1,200 mg once daily as the
recommended zoldonrasib Phase 2 dose for PDAC.
Zoldonrasib Monotherapy
On October 25, 2024, we reported preliminary clinical safety, tolerability and activity data for zoldonrasib from the RMC-9805-001 study as of a data
cutoff date of September 2, 2024 (the Zoldonrasib Data Cutoff Date) in patients with previously treated solid tumors harboring KRAS G12D mutations.
In the RMC-9805-001 study, a total of 179 patients treated across dose cohorts ranging from 150 mg to 1,200 mg once daily and from 300 mg to 600 mg
twice daily were evaluated for safety and tolerability as of the Zoldonrasib Data Cutoff Date (Table 4). As of the Zoldonrasib Data Cutoff Date, the most
common TRAEs that were observed were GI-related toxicities. TRAEs of any grade led to dose reduction in approximately 3% of patients. No TRAEs led
to treatment discontinuation, and there were no treatment-related Grade 4 or 5 adverse events (AEs) or serious adverse events (SAEs) reported.
20
Table 4. RMC-9805-001: TRAEs for all patients treated with zoldonrasib (150 mg to 1,200 mg once daily or 300 mg to 600 mg twice daily)
Total (n=179)
Maximum Severity of TRAEs
Grade 1
Grade 2
Grade 3
Any Grade
TRAEs occurring in≥10% of patients, n (%)
Nausea
48 (27%)
5 (3%)
0 (0%)
53 (30%)
Diarrhea
24 (13%)
5 (3%)
0 (0%)
29 (16%)
Vomiting
20 (11%)
6 (3%)
0 (0%)
26 (15%)
Other select TRAEs, n (%)
ALT elevation
12 (7%)
0 (0%)
1 (1%)
13 (7%)
AST elevation
10 (6%)
1 (1%)
0 (0%)
11 (6%)
Rash
11 (6%)
0 (0%)
0 (0%)
11 (6%)
TRAEs leading to dose reduction, n (%)
5 (3%)
0 (0%)
0 (0%)
5 (3%)
TRAEs leading to treatment discontinuation, n (%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
Median time on treatment was 2.8 months (range: 0.1 – 8.9 months).
‡ Includes preferred terms of dermatitis, dermatitis acneiform, dermatitis psoriasiform, eczema, erthyema, rash, rash erythematous, rash macular, rash maculo-papular, rash papular, rash pruritic
and rash pustular.
ALT, alanine transaminase; AST, aspartate transferase.
We also reported the TRAEs for 99 patients who received 1,200 mg of zoldonrasib per day (1,200 mg once daily (n=60) or 600 mg twice daily (n=39)) as
of the Zoldonrasib Data Cutoff Date (Table 5). The most common TRAEs observed were GI-related toxicities and rash. TRAEs of any grade led to dose
reduction in approximately 4% of these patients. No TRAEs led to treatment discontinuation in these patients, and there were no treatment-related Grade 4
or 5 AEs or SAEs reported.
Table 5. RMC-9805-001: TRAEs for patients treated with 1,200 mg per day (1,200 mg once daily (n=60) or 600 mg twice daily (n=39))
Maximum Severity of TRAEs
Grade 1
Grade 2
Grade 3
Any Grade
TRAEs occurring in≥10% of patients, n (%)
Nausea
23 (23%)
4 (4%)
0 (0%)
27 (27%)
Diarrhea
16 (16%)
4 (4%)
0 (0%)
20 (20%)
Vomiting
13 (13%)
2 (2%)
0 (0%)
15 (15%)
Rash
10 (10%)
0 (0%)
0 (0%)
10 (10%)
Other select TRAEs, n (%)
ALT elevation
5 (5%)
0 (0%)
1 (1%)
6 (6%)
AST elevation
3 (3%)
1 (1%)
0 (0%)
4 (4%)
Stomatitis
0 (0%)
0 (0%)
0 (0%)
0 (0%)
TRAEs leading to dose reduction, n (%)
4 (4%)
0 (0%)
0 (0%)
4 (4%)
TRAEs leading to treatment discontinuation, n (%)
0
0 (0%)
0 (0%)
0 (0%)
‡ Includes preferred terms of dermatitis, dermatitis acneiform, dermatitis psoriasiform, eczema, erthyema, rash, rash erythematous, rash macular, rash maculo-papular, rash papular, rash pruritic
and rash pustular.
ALT, alanine transaminase; AST, aspartate transferase.
We also reported best percentage change in tumor size from baseline as of the Zoldonrasib Data Cutoff Date for patients with PDAC in the second-line or
later (2L+) setting who received 1,200 mg per day (1,200 mg once daily (n=20) or 600 mg twice daily (n=20)) (Figure 8). For these patients who received a
first dose of zoldonrasib at least 14 weeks prior to the Zoldonrasib Data Cutoff Date, the ORR (including both confirmed and pending responses) was 30%,
and the DCR was 80%.)
‡
‡
21
Figure 8. RMC-9805-001: Best percentage change in tumor size from baseline and response rates for 2L+ PDAC patients treated with 1,200 mg daily
Data Cutoff Date of September 2, 2024
All treated patients with PDAC who received a first daily dose at least 14 weeks prior to the Zoldonrasib Data Cutoff Date (applies to Waterfall plot and ORR table); 3 additional patients (n=2 at
1,200 mg daily; n=1 at < 1,200 mg daily) are not displayed on the Waterfall plot due to withdrawal of consent or clinical progression.
Among patients with a response (confirmed or unconfirmed), 55% of first response occurred after 2 months of zoldonrasib treatment (all dose levels).
CR, complete response; NE, not evaluable; PD, progressive disease; PR, partial response; PRu*, unconfirmed partial response; SD, stable disease; RECIST, Response Evaluation Criteria in Solid
Tumors.
We believe that these preliminary safety and clinical activity data as of the Zoldonrasib Data Cutoff Date support ongoing development of zoldonrasib as a
single agent and in combination with other therapies, including daraxonrasib.
Commercial Plan
We intend to retain significant development and commercialization rights to our product candidates and, if marketing approval is obtained, to
commercialize our product candidates on our own, or potentially with one or more collaborators, in the United States and other regions. We currently have
limited sales, marketing and commercial product distribution capabilities. We have begun to build the necessary capabilities in the United States in support
of a potential commercial launch, and over time expect to expand the infrastructure and capabilities for the United States, and potentially other regions, in
connection with the advancement of our pipeline of product candidates. Clinical data, the indications and lines of therapy we pursue, the specific
compounds from our pipeline we advance, our combination therapy and testing strategies, the size of the addressable patient populations, the commercial
infrastructure and manufacturing needs and other factors, may all influence or alter our commercialization plans.
Manufacturing
We rely on and will continue to rely on contract manufacturing organizations (CMOs) for both drug substance and drug product. Currently, all of our
manufacturing is outsourced to well-established third-party manufacturers. We have entered into contracts with CMOs for production of drug substance
and drug product for our clinical trials and IND-enabling development studies, and plan to enter into additional contracts with these or other manufacturers
for additional supply.
Our outsourced approach to manufacturing relies on CMOs to first develop manufacturing processes that are compliant with current Good Manufacturing
Practice (cGMP), then produce material for preclinical and clinical studies. Our agreements with CMOs may obligate them to develop and qualify upstream
and downstream processes, develop drug product process, validate (and, in some cases, develop) suitable analytical methods for test and release as well as
stability testing, produce drug substance for preclinical testing, produce cGMP-compliant drug substance, or produce cGMP-compliant drug product. We
conduct audits of CMOs prior to initiation
22
of activities under these agreements and monitor operations to ensure compliance with the mutually agreed process descriptions and to cGMP regulations.
Competition
The biotechnology and pharmaceutical industries, and the oncology sector in particular, are characterized by rapid evolution of technologies, fierce
competition and strong defense of intellectual property rights. While we believe that our discovery programs, technology, knowledge, experience and
scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic
institutions, government agencies and public and private research institutions, among others.
Any product candidates that we successfully develop and commercialize will compete with currently approved therapies and new therapies that may
become available in the future. Key product features that would affect our ability to effectively compete with other therapeutics include the efficacy, safety
and convenience of our products and the ease of use and effectiveness of any complementary diagnostics and/or companion diagnostics.
There are a number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies.
These treatments consist of small molecule drug products, biologics, cell-based therapies and traditional chemotherapy. Smaller and other early-stage
companies may also prove to be significant competitors. In addition, academic research departments and public and private research institutions may be
conducting research on compounds that could prove to be competitive.
There are several programs in clinical development targeting KRAS G12C, including programs directed at KRAS(OFF) G12C being conducted by Amgen
Inc., Betta Pharmaceuticals Co., Ltd., Bristol Myers Squibb Company, Chengdu Huajian Future Technology Co. Ltd., D3 BIO, Inc., Eli Lilly, GenEros
Biopharma Ltd., Genhouse Bio Co. Ltd., Guangzhou BeBetter Medicine Technology Co., Ltd., HUYA Bioscience, Innovent Biologics, Inc. (licensed to
Genfleet Therapeutics), InventisBio, Jacobio Pharmaceuticals Co. Ltd., Jiangsu Hansoh Pharmaceutical Group Co., Ltd., Merck, Sharpe & Dohme LLC,
Roche, Shanghai Junshi Biosciences Co., Ltd., Shanghai YingLi Pharmaceutical, Shouyao Holdings (Beijing) Co. Ltd. and Suzhou Zelgen
Biopharmaceuticals. BridgeBio Pharma, Inc. and Frontier Medicines each have a dual KRAS(ON/OFF) G12C program in the clinic. There are also several
clinical programs directed at KRAS G12D, including those being conducted by Astellas Pharma Inc., AstraZeneca, Eli Lilly, Genentech, Incyte
Corporation, Jiangsu Hengrui Pharmaceuticals Company Ltd, Quanta Therapeutics, Tyligand Bioscience and Zelgen Biopharmaceuticals. In addition, there
are a few clinical programs directed at KRAS G12V, including those being conducted by Affini-T Therapeutics and Yingkai Saiwei (Beijing)
Biotechnology. Other clinical programs directed at mutant RAS, including pan-RAS inhibitors and Plk1 inhibitors, are being conducted, including those by
Alaunos Therapeutics, Inc., BeiGene, Boehringer Ingelheim, Cardiff Oncology, Chugai Pharmaceutical Co., Ltd., Eli Lilly, Elicio Therapeutics, Gritstone
bio, Inc., Moderna, Inc., Pfizer, Inc., Quanta Therapeutics, RasCal Therapeutics, Shanghai YingLi Pharmaceutical, Silenseed Ltd., Silexion Therapeutics
and Targovax ASA.
The above list includes corporate competitors that we are currently aware of and that are currently conducting clinical trials or marketing in geographies
where we currently anticipate conducting clinical trials for our product candidates. However, companies operating in other geographies and smaller and
other early-stage companies may also prove to be significant competitors. In addition, academic research departments and public and private research
institutions may be conducting research on compounds that could prove to be competitive.
The availability of coverage and reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness
of our products. If and when our products receive FDA approval, they could be subject to maximum fair price (MFP) negotiation and application by the
Centers for Medicare & Medicaid Services (CMS) under terms of the Inflation Reduction Act of 2022 (the IRA), nine years after launch in the United
States. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which
could result in our competitors establishing a strong market position before we are able to enter a given market.
Many of the companies against which we may compete have significantly greater financial resources and expertise in research and development,
manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-
stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These
competitors also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient
registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
23
Intellectual Property
Our success depends in part on our ability and the ability of our collaborators to obtain and maintain proprietary protection for our technology, programs
and know-how related to our business, defend and enforce our intellectual property rights, in particular, our patent rights, preserve the confidentiality of our
trade secrets, and operate without infringing valid and enforceable intellectual property rights of others. We endeavor to establish, maintain and enforce
intellectual property rights that protect our business interests.
The term of individual patents depends upon the legal term of patents in the countries in which they are obtained. In most countries in which we file,
including the United States, the patent term is generally 20 years from the earliest date of filing a non-provisional patent application, assuming the patent
has not been terminally disclaimed over a commonly owned patent or a patent naming a common inventor, or over a patent not commonly owned but that
was disqualified as prior art as the result of activities undertaken within the scope of a joint research agreement. In the United States, the term of a patent
may also be eligible for patent term adjustment for delays within the U.S. Patent and Trademark Office (the USPTO). In addition, for patents that cover an
FDA-approved drug, the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act), may permit a patent term extension
of up to five years beyond the expiration of the patent. While the length of such patent term extension is related to the length of time the drug is under
regulatory review, patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only
one patent per approved drug may be extended and only those claims covering the approved drug product, a method for using it or a method for
manufacturing it may be extended. Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that
covers an approved drug. In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering
those products. We plan to seek any available patent term extension to any issued patents we may be granted in any jurisdiction where such extensions are
available; however, there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether
such extensions should be granted, and, if granted, the length of such extensions.
We also rely on trade secrets, know-how and confidential information relating to our programs to develop and maintain our proprietary position, and seek
to protect and maintain the confidentiality of such items to protect aspects of our business that are not amenable to, or that we do not currently consider
appropriate for, patent protection. Our trade secrets include, for example, certain program specific syntheses, manufacturing schema, formulations,
biomarkers, patient selection strategies and certain aspects of our proprietary tri-complex technology platform. It is our policy to require our employees,
consultants, contractors, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements prior to the
commencement of employment or consulting relationships with us, and for employees, contractors and consultants to enter into invention assignment
agreements with us. These agreements generally provide that all confidential information developed or made known to the individual during the course of
the individual’s relationship with us is to be kept confidential and not to be disclosed to third parties except in specific circumstances. Where applicable, the
agreements provide that all inventions to which the individual contributed as an inventor shall be assigned to us, and, as such, will become our property.
There can be no assurance, however, that these agreements will be self-executing or otherwise provide meaningful protection or adequate remedies for our
trade secrets or other proprietary information, including in the event of unauthorized use or disclosure of such information. We also seek to preserve the
integrity and confidentiality of our trade secrets and confidential information by maintaining physical security of our premises and physical and electronic
security of our information technology systems. While we have confidence in the measures we take to protect and preserve our trade secrets, such measures
can be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be
independently discovered by competitors. For more information regarding the risks related to intellectual property, please see “Risk factors—Risks related
to intellectual property.”
Our Program-Specific Patent Portfolio
Our patent portfolio is directed to small molecules, platform methodologies and related technology. We seek patent protection for product candidates,
development programs and related alternatives by filing and prosecuting patent applications in the United States and other countries, as appropriate.
We own and, in some cases, co-own or exclusively license, patents and patent applications related to our RAS tri-complex inhibitors and related platform
technology. Our patent portfolio related to this program consists of ownership rights to several patent families that include filings covering compositions of
matter or methods of using our development candidates alone or in combination with certain other therapeutic agents, or aspects pertaining to our tri-
complex approach to RAS inhibition. The issued patents, and any patents issuing from these patent applications are expected to expire between 2031 (for
patents originating from the Warp Drive Bio portfolio) and 2044 (for patents from our portfolio that did not originate from Warp Drive Bio), without
accounting for potentially available patent term adjustments or extensions.
We also own, co-own or exclusively license patents and patent applications related to our RAS companion inhibitors. These patents include filings relating
to compositions of matter or methods of using our development candidate. The issued patents, and any patents
24
issuing from these patent applications, are expected to expire between 2035 and 2043, without accounting for potentially available patent term adjustments
or extensions.
Government Regulation
The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the
research, development, testing, manufacture, storage, recordkeeping, approval, labeling, marketing and promotion, distribution, post-approval monitoring
and reporting, sampling, and import and export of products, such as those we are developing. The process of obtaining regulatory approvals and the
subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial
resources.
U.S. Drug Regulation
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (the FDCA) and its implementing regulations. FDA
approval is required before any new drug can be marketed in the United States. Drugs are also subject to other federal, state and local statutes and
regulations. Failure to comply with applicable FDA or other requirements may subject a company to a variety of administrative or judicial sanctions, such
as FDA clinical holds, refusal to approve pending applications, withdrawal of an approval, warning or untitled letters, product recalls, product seizures,
total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following:
•
completion of certain extensive preclinical laboratory tests and animal studies, including safety and toxicity studies performed in accordance
with applicable regulations, including the FDA’s Good Laboratory Practice (GLP) regulations;
•
manufacture of clinical drug supply in accordance with the FDA’s cGMP regulations for use in clinical studies;
•
submission to the FDA of an Investigational New Drug application (IND), which must become effective before human clinical studies may
begin and must be updated annually or when certain changes or updates are made;
•
approval by an independent institutional review board (IRB) or ethics committee representing each clinical site before a clinical study may be
initiated;
•
performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice (GCP), regulations to establish
the safety and efficacy of the product candidate for each proposed indication;
•
preparation of and submission to the FDA of a New Drug Application (NDA) after completion of all pivotal trials;
•
a determination by the FDA within 60 days of its receipt of an NDA to file the application for review;
•
satisfactory completion of an FDA advisory committee review, if applicable;
•
satisfactory completion of an FDA pre-approval inspection of the manufacturing facility(ies) where the product is manufactured to assess
compliance with cGMP regulations, and of potential inspection selected clinical investigation sites to assess compliance with GCP;
•
payment of user fees for FDA review of the NDA; and
•
FDA review and approval of an NDA to permit commercial marketing of the product for its particular labeled uses in the United States.
Preclinical and Clinical Studies
Preclinical tests include laboratory (in vitro) evaluation of product chemistry, formulation and toxicity, as well as animal (in vivo) studies to assess the
characteristics and potential safety and efficacy of the product candidate. The conduct of certain preclinical tests that provide safety and toxicological
information must comply with certain federal regulations and requirements, including GLP. The results of preclinical testing are submitted to the FDA as
part of an IND along with other information, including information about the product’s chemistry, manufacturing and controls (CMC) and any available
human data or literature to support use of the product in humans. An IND is a request for allowance from the FDA to administer an investigational product
to humans. Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
The central focus of an IND submission is on the general investigational plan and the protocol(s) for human studies. An IND must become effective before
human clinical trials may begin. An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises
concerns or questions related to the proposed clinical studies. In such a case, the IND
25
may be placed on clinical hold, and the IND sponsor and the FDA must resolve any outstanding concerns or questions before clinical studies can begin.
For each successive clinical trial conducted with the investigational drug, a separate, new protocol submission to an existing IND must be made, along with
any subsequent changes to the investigational plan. Sponsors are also subject to ongoing reporting requirements, including submission of IND safety
reports for any serious adverse experiences associated with use of the investigational drug or findings from preclinical studies suggesting a significant risk
for human subjects, as well as IND annual reports on the progress of the investigations conducted under the IND.
Clinical studies involve the administration of the investigational drug to human subjects under the supervision of qualified investigators in accordance with
GCP, which include among other things, the requirement that all research subjects provide their informed consent for participation in each clinical study.
Clinical studies are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and
the efficacy criteria to be evaluated. A protocol for each clinical study and any subsequent protocol amendments must be submitted to the FDA as part of
the IND. Additionally, approval must also be obtained from each clinical study site’s IRB before a study may be initiated at the site, and the IRB must
monitor the study until completed. Sponsors of clinical trials generally must register and report ongoing clinical studies and clinical study results to public
registries, including the website maintained by the U.S. National Institutes of Health, ClinicalTrials.gov.
Human clinical trials are typically divided into three or four phases. Although the phases are usually conducted sequentially, they may overlap or be
combined.
•
Phase 1. The drug is initially introduced into healthy human subjects or into patients with the target disease or condition. These studies are
designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the drug in humans, the side effects associated
with increasing doses, and if possible, to gain early evidence on effectiveness. In the case of some products for severe or life-threatening
diseases, such as cancer, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial
human testing is often conducted in patients.
•
Phase 2. The drug is administered to a limited patient population to evaluate tolerance and optimal dose, identify possible adverse side
effects and safety risks, and preliminarily evaluate efficacy. Multiple Phase 2 trials may be conducted to obtain additional data prior to
beginning Phase 3 trials.
•
Phase 3. The drug is administered to an expanded patient population, generally at geographically dispersed clinical study sites to generate
enough data to statistically evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the
investigational product and to provide an adequate basis for product labeling.
In some cases, the FDA may condition approval of an NDA for a product candidate on the sponsor’s agreement to conduct additional clinical studies after
approval. In other cases, a sponsor may voluntarily conduct additional clinical studies after approval to gain more information about the drug in the
approved indication. Such post-approval studies are sometimes referred to as Phase 4 clinical studies.
The FDA, the IRB, other regulatory authorities or the clinical study sponsor may suspend or terminate a clinical study at any time on various grounds,
including a finding that the research subjects are being exposed to an unacceptable health risk. The sponsor may also suspend or terminate a clinical study
based on evolving business objectives and/or competitive climate.
Concurrent with clinical trials, companies may complete additional in vivo studies and develop additional information about the characteristics of the
product candidate. Companies must also finalize a process for manufacturing the product in commercially applicable quantities in accordance with cGMP
requirements. The manufacturing process must be capable of consistently producing quality batches of the product and, among other things, must use
validated methods for testing the product against specifications to confirm its identity, strength, quality and purity. Additionally, appropriate packaging
must be selected and tested, and stability studies must be conducted to demonstrate that the product does not undergo unacceptable deterioration over its
shelf life.
U.S. Review and Approval Process
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of preclinical studies and other
non-clinical studies and clinical trials, together with detailed information relating to the product’s CMC and proposed labeling, among other things, are
submitted to the FDA in the form of an NDA requesting approval to market the product for one or more indications. The submission of an NDA requires
payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.
An NDA must include all relevant data available from pertinent preclinical and clinical studies, including negative or ambiguous results as well as positive
findings, among other things. Data can come from company-sponsored clinical studies intended to test the
26
safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing
approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational product to the
satisfaction of the FDA.
The FDA reviews all submitted NDAs before it accepts them for filing. The FDA has 60 days from its receipt of an NDA to determine whether the
application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. The FDA
may request additional information rather than accept an application for filing. In this event, the application must be resubmitted with the additional
information and is subject to payment of additional user fees. The resubmitted application is also subject to review before the FDA accepts it for filing.
Once the submission is accepted for filing, the FDA begins an in-depth substantive review. Under applicable performance goals established by the
Prescription Drug User Fee Act (the PDUFA), the FDA endeavors to review applications subject to standard review within ten to twelve months, and to
review applications subject to priority review within six to eight months, depending on whether the drug is a new molecular entity.
The FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee
for review, evaluation and recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the
recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an
application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure
consistent production of the product within required specifications. Additionally, the FDA may inspect one or more clinical sites to assure that relevant
study data were obtained in compliance with GCP requirements.
After the FDA evaluates the NDA and conducts any inspections of manufacturing facilities and/or clinical trial sites, it may issue an approval letter or a
complete response letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A
complete response letter indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A
complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information, including
additional clinical trials or other significant and time-consuming requirements related to clinical trials, nonclinical testing or manufacturing in order for the
FDA to reconsider the application. Even with submission of this additional information, the FDA may ultimately decide that an application does not satisfy
the regulatory criteria for approval.
If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for
which such product may be marketed. For example, as a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy
(REMS) program to help ensure that the benefits of the drug outweigh its risks. If the FDA determines a REMS program is necessary during review of the
application, the drug sponsor must agree to the REMS plan at the time of approval. A REMS program may be required to include various elements, such as
a medication guide or patient package insert, a communication plan to educate healthcare providers of the drug’s risks, or other elements to assure safe use,
such as limitations on who may prescribe or dispense the drug, dispensing only under certain circumstances, special monitoring and the use of patient
registries. In addition, all REMS programs must include a timetable to periodically assess the strategy following implementation. The FDA also may
condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.
Further, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety and efficacy, and the FDA has the
authority to prevent or limit further marketing of a product based on the results of these post-marketing programs. Moreover, changes to the conditions
established in an approved application, including changes in indications, labeling or manufacturing processes or facilities may require submission and FDA
approval of a new NDA or a supplemental NDA (sNDA) before the changes can be implemented. An sNDA for a new indication typically requires clinical
data similar to that supporting the original approval, and the FDA uses similar procedures in reviewing supplements as it does in reviewing original
applications.
Expedited Development and Review Programs
The FDA offers a number of expedited development and review programs for qualifying product candidates, and we may seek one or more of these
programs for our current or future products.
Investigational drug products may be eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and
demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product and
the specific indication for which it is being studied. The sponsor of a fast track product candidate has opportunities for frequent interactions with the FDA
review team during product development and, once an NDA is submitted, the application may be eligible for priority review. A fast track product candidate
may also be eligible for rolling review,
27
where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a
schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and
the sponsor pays any required user fees upon submission of the first section of the NDA.
A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite
its development and review. A product candidate can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product
may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects
observed early in clinical development. The designation includes all of the fast track program features, as well as more intensive FDA interaction and
guidance beginning as early as Phase 1 and FDA’s commitment to expedite the development and review of the product, including involvement of senior
managers.
After an NDA is submitted for a product candidate, including a product candidate with a fast track designation and/or breakthrough therapy designation, the
NDA may be eligible for priority review. An NDA is eligible for priority review if the product candidate has the potential to provide a significant
improvement in the treatment, diagnosis or prevention of a serious disease or condition compared to marketed products. Depending on whether a drug
contains a new molecular entity, priority review designation means the FDA’s goal is to take an action on the marketing application within six months of
the 60-day filing date, compared with 12 months under standard review.
Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive
accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a
clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity
or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative
treatments. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled confirmatory
clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit, and may require that such
confirmatory trials are underway prior to granting any accelerated approval. The FDA may withdraw approval of a drug or an indication approved under
accelerated approval if, for example, sponsor fails to conduct the confirmatory trial in a timely manner, or if the confirmatory trial fails to verify the
predicted clinical benefit of the product. In addition, the FDA requires pre-approval of promotional materials as a condition for accelerated approval, which
could adversely impact the timing of the commercial launch of the product.
Fast track designation, breakthrough therapy designation, priority review and accelerated approval do not change the scientific or medical standards for
approval or the quality of evidence necessary to support approval, but they may expedite the development or review process. Even if a product qualifies for
one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or the time period for FDA
review or approval may not be shortened.
Orphan Drug Designation
We intend to pursue orphan drug designation for one or more of our product candidates with respect to certain oncology indications, as appropriate, with
the potential to obtain orphan drug exclusivity for our products, if approved.
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition
that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States for which there is no reasonable
expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in
the United States for that drug. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the
generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any
advantage in, or shorten the duration of, the regulatory review or approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is
entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug for
the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug
exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a
different disease or condition. Orphan drug exclusivity also could block the approval of a product for seven years if a competitor obtains approval of the
“same drug” as defined by the FDA, or if a product candidate is determined to be contained within the approved product for the same disease or condition.
Among the other benefits of orphan drug designation are opportunities for grant funding towards clinical trial costs, tax credits for certain research and a
waiver of the application user fee.
28
A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the disease or condition for which it
received orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for
designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare
disease or condition.
Pediatric Information and Pediatric Exclusivity
Under the Pediatric Research Equity Act (PREA), certain NDAs and certain sNDAs must contain data to assess the safety and efficacy of the drug for the
claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product
is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial waivers. A deferral may be granted for several reasons,
including a finding that the drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness
data needs to be collected before the pediatric clinical trials begin. Generally, the FDA requires that a sponsor that is planning to submit a marketing
application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit
an initial Pediatric Study Plan (iPSP), within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the
initiation of a Phase 2/3 or Phase 3 study. The iPSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including
study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any
request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting
information. The FDA and the sponsor must reach an agreement on the iPSP. A sponsor can submit amendments to an agreed-upon iPSP at any time if
changes to the pediatric plan need to be considered based on data collected from preclinical studies, early phase clinical trials and/or other clinical
development programs.
A drug product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity
periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the
voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
Post-Approval Requirements
Once an NDA is approved, a product will be subject to pervasive and continuing regulation by the FDA, including, among other things, requirements
relating to drug listing and registration, recordkeeping, periodic reporting, product sampling and distribution, adverse event reporting and advertising,
marketing and promotion. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. While
physicians may prescribe a product for uses in patient populations that are not described in the product’s approved labeling, or “off-label” uses,
manufacturers may only promote a product for the approved indications and in accordance with the provisions of the approved labeling of such product.
However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling. The FDA and
other agencies actively enforce the laws and regulations prohibiting the promotion of “off-label” uses, and a company that is found to have improperly
promoted “off-label” uses may be subject to significant liability.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and
approval. There also are continuing user fee requirements, under which the FDA assesses an annual program fee for each product identified in an approved
NDA. In addition, quality-control, drug manufacture, packaging and labeling procedures must continue to conform to cGMP after approval. Drug
manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the
FDA subjects entities to periodic unannounced and announced inspections by the FDA and these state agencies, during which the applicable agency
inspects manufacturing facilities to assess compliance with cGMP requirements and other laws. FDA regulations also require investigation and correction
of any deviations from cGMP and impose reporting requirements upon manufacturers and their subcontractors. Accordingly, manufacturers must continue
to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory
compliance. The FDA may withdraw approval of a product if compliance with regulatory requirements is not maintained or if problems occur after the
product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or
frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new
safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other
restrictions under a REMS program.
Other potential consequences include, among other things:
•
restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls;
•
fines, warning or untitled letters or holds on clinical studies;
29
•
refusal by the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product
approvals;
•
product seizure or detention, or refusal by the FDA to permit the import or export of products;
•
mandated modifications of promotional materials and labeling and the issuance of corrective information;
•
the issuance of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety
information about the product; or
•
injunctions or the imposition of civil or criminal penalties.
Manufacturers also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the
prohibition on promoting products for “off-label” use, industry-sponsored scientific and educational activities and promotional activities involving the
internet.
The FDA may also require post-approval studies and clinical trials if the FDA finds that scientific data, including information regarding related drugs,
deem them appropriate. The purpose of such studies can include, among other things, assessments designed to evaluate a known serious risk or signals of
serious risk related to the drug or to identify an unexpected serious risk when available data indicate the potential for a serious risk. The FDA may also
require a labeling change if it becomes aware of new safety information that it believes should be included in the labeling of a drug.
International Regulation
In addition to regulations in the United States, we could become subject to a variety of foreign regulations regarding development, approval, commercial
sales and distribution of our products if we seek to market our product candidates in other jurisdictions. Regardless of whether we obtain FDA approval for
a product, we must obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or
marketing of the product in those countries. The approval process varies from country to country and can involve additional product testing and additional
review periods, and the time may be longer or shorter than that required to obtain FDA approval. The requirements governing, among other things, the
conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. Regulatory approval in one country does not
ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process
in others. If we fail to comply with applicable foreign regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory
approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Non-Clinical Studies and Clinical Trials
Similar to the United States, the various phases of non-clinical and clinical research in the European Union, or EU, are subject to significant regulatory
controls.
Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances. Non-clinical (pharmaco-
toxicological) studies must be conducted in compliance with the principles of GLP as set forth in EU Directive 2004/10/EC (unless otherwise justified for
certain particular medicinal products, e.g., radio-pharmaceutical precursors for radio-labeling purposes). In particular, non-clinical studies, both in vitro and
in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and
criteria for a quality system for the organizational process and the conditions for non-clinical studies. These GLP standards reflect the Organisation for
Economic Co-operation and Development requirements.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for
Harmonization of Technical Requirements for Pharmaceuticals for Human Use (ICH), GCP guidelines, as well as the applicable regulatory requirements
and the ethical principles that have their origin in the Declaration of Helsinki. If the sponsor of the clinical trial is not established within the EU, it must
appoint an EU entity to act as its legal representative. The sponsor must take out a clinical trial insurance policy, and, in most EU member states, the
sponsor is liable to provide “no fault” compensation to any study subject injured in the clinical trial.
The regulatory landscape related to clinical trials in the EU has been subject to recent changes. The EU Clinical Trials Regulation (CTR), which was
adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022, with a three-year transition period. Unlike
directives, the CTR is directly applicable in all EU member states without the need for member states to further implement it into national law. The CTR
notably harmonizes the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains
a centralized EU portal and database.
30
The CTR provides for a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to
make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The
CTA must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the
manufacture and quality of the medicinal product under investigation. The assessment procedure of the CTA has been harmonized as well, including a joint
assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own
territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved,
clinical study development may proceed.
The CTR transition period ended on January 31, 2025, and all clinical trials (and related applications) are now fully subject to the provisions of the CTR.
Medicines used in clinical trials must be manufactured in accordance with cGMP. Other national and EU-wide regulatory requirements may also apply.
Marketing Authorization
In order to market our product candidates in the EU and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely,
in the EU, medicinal product candidates can only be commercialized after obtaining a marketing authorization (MA). To obtain regulatory approval of a
product candidate under EU regulatory systems, we must submit a MA application (MAA). The process for doing this depends, among other things, on the
nature of the medicinal product. There are two types of MAs.
•
“Centralized MAs” are issued by the European Commission through the centralized procedure based on the opinion of the Committee for
Medicinal Products for Human Use, or CHMP, of the European Medicines Agency (EMA), and are valid throughout the EU. The centralized
procedure is compulsory for certain types of medicinal products such as (i) medicinal products derived from biotechnological processes, (ii)
designated orphan medicinal products, (iii) advanced therapy medicinal products (ATMPs) (such as gene therapy, somatic cell therapy and
tissue engineered products) and (iv) medicinal products containing a new active substance indicated for the treatment of certain diseases,
such as cancer, HIV/AIDS, diabetes, neurodegenerative diseases or autoimmune diseases and other immune dysfunctions, and viral diseases.
The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or for products that
constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU. Once the
evaluation is finalized, the EMA sends the CHMP’s opinion to the European Commission which has up to 67 days to adopt a legally binding
decision and issue a MA.
•
“National MAs” are issued by the competent authorities of the EU member states, only cover their respective territory, and are available for
product candidates not falling within the mandatory scope of the centralized procedure described above. Where a product has already been
authorized for marketing in an EU member state, this national MA can be recognized in another member state through the mutual recognition
procedure. If the product has not received a national MA in any member state at the time of application, it can be approved simultaneously in
various member states through the decentralized procedure. Under the decentralized procedure an identical dossier is submitted to the
competent authorities of each of the member states in which the MA is sought, one of which is selected by the applicant as the reference
member state. The timeframe to obtain national MAs varies depending on the concerned procedure. Under the mutual recognition procedure,
the reference member state (where the medicinal product is already authorized) must prepare the assessment report within 90 days. The
concerned member states have up to 90 days to recognize the decision of the reference member state, and approve the summary of product
characteristics, labeling and packaging. Then, each member state has a 30-day period to grant the national MA. Under the decentralized
procedure, the evaluation period is 120 days for the reference member state, followed by a 90-day period for the concerned member states to
approve the summary of product characteristics, labeling and packaging. Then, each member state has a 30-day period to grant the national
MA. In order to grant the MA, the EMA or the competent authorities of the EU member states make an assessment of the risk-benefit balance
of the product on the basis of scientific criteria concerning its quality, safety and efficacy. MAs have an initial duration of five years. After
these five years, the authorization may be renewed on the basis of a reevaluation of the risk-benefit balance.
Data and Marketing Exclusivity
In the EU, new products authorized for marketing (i.e., reference products) generally receive eight years of data exclusivity and an additional two years of
market exclusivity upon receipt of MA. If granted, the data exclusivity period prevents generic and biosimilar applicants from relying on the preclinical and
clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years
from the date on which the reference product was first authorized in
31
the EU. The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have
elapsed from the initial MA of the reference product in the EU. The overall 10-year market exclusivity period can be extended to a maximum of 11 years if,
during the first 8 years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications, which, during the scientific
evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. However, there is no guarantee
that a product will be considered by the EU’s regulatory authorities to be a new chemical or biological entity, and products may not qualify for data
exclusivity.
Orphan Medicinal Products
The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States. A medicinal product can be
designated as an orphan if its sponsor can establish that: (1) the product is intended for the diagnosis, prevention or treatment of a life threatening or
chronically debilitating condition; (2) either (a) such condition affects not more than 5 in 10,000 persons in the EU when the application is made, or (b) the
product, without the benefits derived from the orphan status, would not generate sufficient return in the EU to justify the necessary investment for its
development; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized for
marketing in the EU or, if such method exists, the product will be of significant benefit to those affected by that condition. In the EU, orphan designation
entitles a party to a number of incentives, such as protocol assistance and scientific advice specifically for designated orphan medicines, and potential fee
reductions depending on the status of the sponsor.
Orphan designation must be requested before submitting an MAA. An EU orphan designation entitles a party to incentives such as reduction of fees or fee
waivers, protocol assistance, and access to the centralized procedure. Upon grant of a MA, orphan medicinal products are entitled to ten years of market
exclusivity for the approved indication, which means that the competent authorities cannot accept another MAA, or grant a MA, or accept an application to
extend a MA for a similar medicinal product for the same indication for a period of ten years. The period of market exclusivity is extended by two years for
orphan medicinal products that have also complied with an agreed pediatric investigation plan (PIP). No extension to any supplementary protection
certificate can be granted on the basis of pediatric studies for orphan indications. Orphan designation does not convey any advantage in, or shorten the
duration of, the regulatory review and approval process.
The orphan exclusivity period may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for
which it received orphan destination, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity
or where the prevalence of the condition has increased above the threshold. Additionally, MA may be granted to a similar product for the same indication at
any time if: (i) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (ii) the applicant
consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product.
The aforementioned EU rules are generally applicable in the European Economic Area (EEA), which consists of the 27 EU member states plus Norway,
Liechtenstein and Iceland.
Brexit and the Regulatory Framework in the United Kingdom
Since the end of the Brexit transition period on January 1, 2021, and the implementation of the Windsor Framework on January 1, 2025, the United
Kingdom (UK) has not been directly subject to EU laws with respect to medicinal products. The EU laws that have been transposed into UK law through
secondary legislation remain applicable in Great Britain (GB) (comprising England, Scotland and Wales), but new legislation such as the (EU) CTR is not
applicable in GB.
Since January 1, 2021, the Medicines and Healthcare products Regulatory Agency (MHRA) has been the UK’s standalone medicines and medical devices
regulator. As a result of the Northern Ireland Protocol, different rules applied in Northern Ireland than in GB; broadly, Northern Ireland continued to follow
the EU regulatory regime. However, on January 1, 2025, a new arrangement called the “Windsor Framework” came into effect and reintegrated Northern
Ireland under the regulatory authority of the MHRA with respect to medicinal products. The Windsor Framework removes EU licensing processes, and EU
labelling and serialization requirements in relation to Northern Ireland, and introduces a UK-wide licensing process for medicinal products.
The MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit patients,
including a 150-day assessment and a rolling review procedure. In order to obtain a UK MA to commercialize products in the UK, an applicant must be
established in the UK and must follow one of the UK national authorization procedures or one of the remaining post-Brexit international cooperation
procedures to obtain an MA to commercialize products in the UK. Since January 1, 2024, an international recognition procedure has been in place whereby
the MHRA has been able to conduct targeted assessments of an MAA by recognizing approvals from trusted partner agencies such as the European
Medicines Agency.
32
The UK regulatory framework in relation to clinical trials is derived from pre-existing EU legislation (as implemented into UK law, through secondary
legislation). Whether the regulation of clinical trials in the UK will mirror the (EU) CTR in the long term is not yet certain; however, on December 12,
2024, the UK government introduced a legislative proposal - the Medicines for Human Use (Clinical Trials) Amendment Regulations 2024 - that, if
implemented, will replace the current regulatory framework for clinical trials in the UK. The legislative proposal aims to provide a more flexible regime to
make it easier to conduct clinical trials in the UK, increase the transparency of clinical trials conducted in the UK and make clinical trials more patient
centered. The UK government has provided the legislative proposal to the UK Parliament for its review and approval. Once the legislative proposal is
approved (with or without amendment), which is expected to occur in early 2026, it will be adopted into UK law. Under the terms of the Northern Ireland
Protocol, provisions of the (EU) CTR which relate to the manufacture and import of investigational medicinal products and auxiliary medicinal products
currently apply in Northern Ireland.
Other Healthcare Laws
Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and
foreign jurisdictions in which they conduct their business. Such laws include, without limitation, U.S. federal and state anti-kickback, fraud and abuse, false
claims, consumer fraud, pricing reporting, and transparency laws and regulations, as well as similar laws in jurisdictions outside the United States.
For example, the U.S. federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying,
soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or
arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare
programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.
The federal civil and criminal false claims laws, including the civil False Claims Act, prohibit, among other things, any individual or entity from knowingly
presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a
false record or statement material to a false or fraudulent claim to the federal government. In addition, the government may assert that a claim including
items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False
Claims Act.
The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), created additional federal civil and criminal statutes that prohibit,
among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program. Similar to the federal Anti-Kickback Statute, a
person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to
have committed a violation.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is
available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to
payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-
physician practitioners (defined to include physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology
assistants and certified nurse midwives) and teaching hospitals, and further requires applicable manufacturers and applicable group purchasing
organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, such as state anti-kickback and false claims
laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving
healthcare items or services reimbursed by non-government third-party payors, including private insurers, or by patients themselves; state laws that require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance
promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state
laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other
remuneration and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of
pharmaceutical sales representatives.
Violation of any of such laws or any other government regulations that apply may result in penalties, including, without limitation, civil and criminal
penalties, damages, fines, additional reporting obligations, the curtailment or restructuring of operations, exclusion from participation in government
healthcare programs and individual imprisonment.
33
Data Privacy and Security
We may be subject to numerous federal, state and foreign laws, regulations that govern the collection, use, disclosure and protection of health-related and
other personal information. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health
information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure and protection of health-related
and other personal information. In addition, certain foreign laws govern the privacy and security of personal data, including health-related data. Privacy and
security laws, regulations and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts and can result in
investigations, proceedings or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.
Coverage and Reimbursement
Sales of any pharmaceutical product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state and
foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by
third-party payors. Significant uncertainty exists as to the coverage and reimbursement status of any newly approved product. Decisions regarding the
extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a particular
product does not ensure that other payors will also provide coverage for the product. As a result, the coverage determination process can require
manufacturers to provide scientific and clinical support for the use of a product to each payor separately and can be a time-consuming process, with no
assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
In addition, third-party payors are increasingly reducing reimbursements for pharmaceutical products and services. The U.S. government and state
legislatures have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and
requirements for substitution of generic products. Third-party payors are increasingly challenging the prices charged, examining the medical necessity and
reviewing the cost effectiveness of pharmaceutical products, in addition to questioning their safety and efficacy. Adoption of price controls and cost-
containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any
product. Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product at all could reduce physician
usage and patient demand for the product.
In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on
specific products and therapies. For example, the EU provides options for its member states to restrict the range of medicinal products for which their
national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a
specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the
medicinal product on the market. Pharmaceutical products may face competition from lower-priced products in foreign countries that have placed price
controls on pharmaceutical products and may also compete with imported foreign products. Furthermore, there is no assurance that a product will be
considered medically reasonable and necessary for a specific indication, will be considered cost-effective by third-party payors, that an adequate level of
reimbursement will be established even if coverage is available or that the third-party payors’ reimbursement policies will not adversely affect the ability of
manufacturers to sell products profitably.
Healthcare Reform
In the United States and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory
changes to the healthcare system. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act (the ACA), was signed into law, which substantially changed the way healthcare is financed by both government and private insurers in
the United States. The ACA contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement
adjustments and fraud and abuse changes. Additionally, the ACA increased the minimum level of Medicaid rebates payable by manufacturers of brand
name drugs from 15.1% to 23.1%; required collection of rebates for drugs paid by Medicaid managed care organizations; imposed a non-deductible annual
fee on pharmaceutical manufacturers or importers that sell certain “branded prescription drugs” to specified federal government programs; expanded
eligibility criteria for Medicaid programs; created a Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative
clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test
innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Since its enactment, there have been judicial, executive and congressional challenges to certain aspects of the ACA. In June 2021, the U.S. Supreme Court
dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
34
Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers,
which will remain in effect through 2032, with the exception of a temporary suspension that occurred from May 1, 2020 through March 31, 2022, absent
additional congressional action. Moreover, there has recently been heightened government scrutiny over the manner in which manufacturers set prices for
their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring
more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program
reimbursement methodologies for pharmaceutical products. On August 16, 2022, the IRA was signed into law. Among other things, the IRA requires
manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare
Part D to penalize price increases that outpace inflation (first due in 2023) and replaces the Part D coverage gap discount program with a new manufacturer
discounting program (which began in 2025). The IRA permits the Secretary of the Department of Health and Human Services to implement many of these
provisions through guidance, as opposed to regulation, for the initial years. CMS has published the negotiated prices for the initial ten drugs, which will
first be effective in 2026, and the list of the subsequent 15 drugs that will be subject to negotiation, although the Medicare drug price negotiation program
is currently subject to legal challenges. For that and other reasons, it is currently unclear how the IRA will be effectuated.
Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing,
including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure, drug price reporting
and other transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing. Some states have
enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these
states. Furthermore, there has been increased interest by third-party payors and government authorities in reference pricing systems and publication of
discounts and list prices.
We expect that additional state, federal and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that
federal, state and foreign governments will pay for healthcare product candidates and services, which could result in reduced demand for our product
candidates once approved or additional pricing pressures.
Employees and Human Capital Resources
As of December 31, 2024, we had 534 full-time employees. Within our workforce, as of December 31, 2024, 423 employees were engaged in research and
development. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with
our employees to be good.
Our human capital resources objectives include meeting hiring goals, deepening our oncology and public company expertise, integrating new employees,
and retaining, incentivizing and developing our existing employees. We provide competitive compensation and benefit programs, including competitive
salaries, incentive programs, equity awards, an employee stock purchase plan, healthcare and insurance benefits. The principal purposes of our equity
incentive programs are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation
awards and to align the interests of these individuals with those of our stockholders. We regularly review our compensation practices to support our
employees, including evaluating innovative health and wellness programs to continue to respond to employee needs.
We are committed to creating an environment where diverse perspectives are encouraged and supported. This commitment is memorialized as one of our
corporate core values (Inclusiveness and Fairness) and is brought to life for every employee during our cultural integration sessions for new hires and
through an informal network of cultural champions that we foster. As of December 31, 2024, females represented 58% of our full-time employees, and 426
of our employees self-identified their race, of which 55% self-identified as an “underrepresented minority,” as that term is defined by Nasdaq rules.
We are equally committed to the development of our employees and one of our corporate core values (Exceptional Together) captures this commitment.
We offer our employees career-specific training and resources and support development opportunities through company-sponsored programs, including
learning, mentoring, and coaching opportunities. We host regular company-wide sessions where our employees discuss ideas related to corporate initiatives
and scientific breakthroughs and recognize each other’s contributions. In addition, we conduct an anonymous all-employee engagement survey at least
annually, and take the results of this survey into account in management of our employees and business.
Corporate Information
We were founded in October 2014 as a Delaware corporation. Our principal executive offices are located at 700 Saginaw Drive, Redwood City, California
94063, and our telephone number is (650) 481-6801.
35
On November 9, 2023, we completed the announced acquisition of EQRx, Inc., a Delaware corporation (EQRx), pursuant to an Agreement and Plan of
Merger, dated as of July 31, 2023. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Acquisition of
EQRx, Inc”.
Our website address is www.revmed.com. We make available on or through our website certain reports and amendments to those reports that we file with or
furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended (the Exchange Act). These include our annual reports on Form 10-
K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Exchange Act. We make this information available on or through our website free of charge as soon as reasonably practicable after we
electronically file the information with, or furnish it to, the SEC. References to our website address do not constitute incorporation by reference of the
information contained on the website, and the information contained on the website is not part of this document or any other document that we file with or
furnish to the SEC. The SEC maintains a site on the worldwide web that contains reports, proxy and information statements and other information
regarding our filings at www.sec.gov.
36
Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in
this Annual Report on Form 10-K, including our financial statements and the related notes and the section titled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” before deciding whether to invest in our common stock. The occurrence of any of the events or
developments described below or other risks we face could materially and adversely affect our business, competitive position, financial condition, results of
operations, cash flows and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your
investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and
the market price of our common stock.
Risks related to our limited operating history, financial position and need for additional capital
We are a clinical-stage precision oncology company with a limited operating history and no products approved for commercial sale. We have incurred
significant losses since our inception. We expect to incur losses for at least the next several years and may never achieve or maintain profitability,
which, together with our limited operating history, makes it difficult to assess our future viability.
Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a clinical-stage precision
oncology company, and we have only a limited operating history upon which you can evaluate our business and prospects. We currently have no products
approved for commercial sale, have not generated any revenue from sales of products and have incurred losses in each year since our inception in October
2014. In addition, we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by
companies in new and rapidly evolving fields, particularly in the biopharmaceutical industry.
Since our inception, we have incurred significant net losses. Our net losses were $600.1 million, $436.4 million and $248.7 million, for the years ended
December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $1.7 billion. We have funded our operations
to date primarily with proceeds from the sale of common stock and preferred stock, as well as upfront payments and research and development cost
reimbursement received under our collaboration agreement with Genzyme Corporation, an affiliate of Sanofi (the Sanofi Agreement). The Sanofi
Agreement was terminated in June 2023, and Sanofi has no further reimbursement obligations following this termination. To date, we have devoted
substantially all of our resources to organizing and staffing our company, business planning, raising capital, acquiring and discovering development
programs, securing intellectual property rights and conducting discovery, research and development activities for our programs. We have not yet
demonstrated our ability to successfully complete any clinical trials, including pivotal clinical trials, obtain marketing approvals, manufacture a
commercial-scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product
commercialization. Our product candidates will require substantial additional development time and resources before we will be able to apply for or receive
regulatory approvals and, if approved, begin generating revenue from product sales. We expect to continue to incur significant expenses and operating
losses for the foreseeable future.
We have never generated revenue from product sales and may never be profitable.
Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with our collaboration partners, to successfully
complete the development of, and obtain the regulatory approvals necessary to commercialize, our development programs. We do not anticipate generating
revenue from product sales for the next several years, if ever. Our ability to generate future revenue from product sales depends heavily on our, and any
potential future collaborators’, success in:
•
completing clinical and preclinical development of product candidates and programs and identifying and developing new product candidates;
•
seeking and obtaining marketing approvals for our product candidates;
•
launching and commercializing product candidates for which we obtain marketing approval by establishing a sales force, marketing, medical
affairs and distribution infrastructure or, alternatively, collaborating with a commercialization partner;
•
achieving adequate coverage and reimbursement by third-party payors for our product candidates;
•
establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality,
products and services to support clinical development and the market demand for our product candidates, if approved;
•
obtaining market acceptance of our product candidates as viable treatment options, if approved;
37
•
addressing any competing technological and market developments;
•
negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations
under such collaborations;
•
maintaining, protecting, enforcing and expanding our portfolio of intellectual property rights, including patents, trademarks, trade secrets and
know-how;
•
defending against third-party interference, infringement or other intellectual property-related claims, if any; and
•
attracting, hiring and retaining qualified personnel.
Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs associated with commercializing
any approved product candidate, including prior to a potential launch of any approved product candidate. Our expenses could increase beyond expectations
if we are required by the U.S. Food and Drug Administration (the FDA), the European Medicines Agency (the EMA) or other regulatory agencies to
perform clinical trials or studies in addition to those that we currently anticipate. Even if we are able to generate revenue from the sale of any approved
products, we may not become profitable and may need to obtain additional funding to continue operations.
We will require substantial additional financing to achieve our goals, which may not be available on acceptable terms, or at all. A failure to obtain this
necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.
Our operations have consumed substantial amounts of cash since our inception. Since our inception, we have invested a significant portion of our efforts
and financial resources in research and development activities for our initial preclinical and clinical product candidates.
Preclinical studies, clinical trials and additional research and development activities will require substantial funds to complete. As of December 31, 2024,
we had cash, cash equivalents and marketable securities of $2.3 billion. Through December 31, 2024, we have raised $2.1 billion in underwritten public
offerings, net of underwriting discounts and commissions and offering expenses and have completed sales generating $246.4 million in gross proceeds
pursuant to at-the-market equity offering programs. Our acquisition of EQRx, Inc. (the EQRx Acquisition) added $1.1 billion to our working capital in
2023. We expect to continue to spend substantial amounts to continue the preclinical and clinical development of our current and future programs and to
prepare for their potential commercialization. If we are able to gain marketing approval for our product candidates, we will require significant additional
amounts of cash in order to launch and commercialize our product candidates, if approved, to the extent that their launch and commercialization are not the
responsibility of another collaborator that we may contract with in the future. In addition, other unanticipated costs may arise. Because the design and
outcome of our current, planned and potential future clinical trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to
successfully complete the development and commercialization of our product candidates.
The timing and amount of our future funding requirements depends on many factors, including:
•
the scope, progress, results and costs of researching and developing our product candidates and programs, and of conducting preclinical
studies and clinical trials;
•
the cost of manufacturing our current and future product candidates for clinical trials in preparation for marketing approval and in preparation
for commercialization;
•
the timing of, and the costs involved in, obtaining marketing approvals for our product candidates if clinical trials are successful;
•
the cost of commercialization activities for any of our product candidates, whether alone or in collaboration, including marketing, sales and
distribution costs if any product candidate is approved for sale;
•
our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements;
•
the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs
and the outcome of such litigation;
•
the timing, receipt and amount of sales of, profit share or royalties on, our future products, if any;
•
the emergence of competing cancer therapies or other adverse market developments; and
•
any plans to acquire or in-license other programs or technologies.
38
We will require substantial additional financing for our development efforts for our current and future programs and to prepare for their potential
commercialization. We do not have any committed external source of funds or other support for these activities, and we expect to finance our cash needs
through a combination of public or private equity offerings, debt financings, credit or loan facilities, acquisitions, collaborations, strategic alliances,
licensing arrangements and other marketing or distribution arrangements. In addition, we may seek additional capital due to favorable market conditions or
strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. Additional funds may not
be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required
to:
•
delay, limit, reduce the scope of or terminate one or more of our preclinical studies, clinical trials, or other research and development
activities or eliminate one or more of our development programs altogether; or
•
delay, limit, reduce the scope of or terminate our efforts to establish manufacturing and sales and marketing capabilities or other activities
that may be necessary to commercialize any future approved products, or reduce our flexibility in developing or maintaining our sales and
marketing strategy.
Our operating results may fluctuate significantly, which will make our future results difficult to predict and could cause our results to fall below
expectations.
Our quarterly and annual operating results may fluctuate significantly, which will make it difficult for us to predict our future results. These fluctuations
may occur due to a variety of factors, many of which are outside of our control and may be difficult to predict, including:
•
the timing and cost of, and level of investment in, research, development and commercialization activities, which may change from time to
time;
•
the timing and status of enrollment for our clinical trials;
•
the timing of regulatory approvals, if any, in the United States and internationally;
•
the timing of expanding our operational, financial and management systems and personnel, including personnel to support our clinical
development, quality control, manufacturing and commercialization efforts and our operations as a public company;
•
the cost of manufacturing, as well as building out our supply chain, which may vary depending on the quantity of productions, and the terms
of any agreements we enter into with third-party suppliers;
•
the timing and amount of any milestone, royalty or other payments due under any current or future collaboration or license agreements;
•
coverage and reimbursement policies with respect to any future approved products, and potential future drugs that compete with our
products;
•
the timing and costs to establish sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we
may obtain marketing approval and intend to commercialize on our own or jointly with one or more collaborators;
•
expenditures that we may incur to acquire, develop or commercialize additional products and technologies;
•
the level of demand for any future approved products, which may vary significantly over time;
•
future accounting pronouncements or changes in our accounting policies; and
•
the timing and success or failure of preclinical studies and clinical trials for our product candidates or competing product candidates, or any
other change in the competitive landscape of our industry, including consolidation among our competitors or collaboration partners.
The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result,
comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our
future performance.
39
This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If
our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts
we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price
decline could occur even when we have met any previously publicly stated revenue or operating guidance we may provide.
Risks related to product development and regulatory process
Our business is dependent on the successful development of our current and future product candidates. If we, alone or in collaboration, are unable to
advance our current or future product candidates through clinical trials, obtain marketing approval and ultimately commercialize any of our product
candidates, or we experience significant delays in doing so, our business will be materially harmed.
Our business is dependent on the successful development of our current and future product candidates. We are evaluating certain of our product candidates
in exploratory clinical trials, both as monotherapy and in combination regimens, and currently plan to conduct pivotal clinical trials for our RAS(ON)
inhibitors, including the RASolute 302 study and the RASolve 301 study with daraxonrasib, both of which we recently initiated. The remainder of our
programs are in the preclinical stage, and the clinical development of these programs is subject to our continuing assessment of our portfolio priorities. The
success of our business, including our ability to finance our company and generate revenue from products in the future, which we do not expect will occur
for several years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates, which may never
occur. Our current product candidates, and any of our future product candidates, will require additional preclinical and clinical development, management
of clinical, preclinical and manufacturing activities, marketing approval in the United States and other markets, demonstrating effectiveness to pricing and
reimbursement authorities, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial
organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales.
We have not previously submitted a New Drug Application (NDA) to the FDA or similar applications to a comparable foreign regulatory authority, for any
product candidate. An NDA or other relevant regulatory application must include extensive preclinical and clinical data and supporting information to
establish that the product candidate is safe and effective for each desired indication. The NDA or other relevant application must also include significant
information regarding the CMC for the product. We cannot be certain that our current or future product candidates will be successful in clinical trials or
receive regulatory approval. Further, even if they are successful in clinical trials, our product candidates or any future product candidates may not receive
regulatory approval. If we do not receive regulatory approvals for current or future product candidates, we may not be able to continue our operations. Even
if we successfully obtain regulatory approval to market a product candidate, our revenue will depend, in part, upon the size of the markets in the territories
for which we or collaborators gain regulatory approval and have commercial rights, as well as the availability of competitive products, whether there is
sufficient third-party reimbursement and adoption by physicians.
We plan to seek regulatory approval to commercialize our product candidates both in the United States and in select foreign countries, alone or in
collaboration. While the scope of regulatory approval generally is similar in other countries, in order to obtain separate regulatory approval in other
countries, we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy. Other countries also have
their own regulations governing, among other things, clinical trials and commercial sales, as well as pricing and distribution of drugs, and we may be
required to expend significant resources to obtain regulatory approval and to comply with ongoing regulations in these jurisdictions.
The success of our current and future product candidates will depend on several factors, including the following:
•
successful completion of clinical trials and preclinical studies;
•
sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;
•
allowance to proceed with clinical trials under Investigational New Drug applications (INDs) by the FDA or under comparable applications
by comparable regulatory authorities for our planned clinical trials or future clinical trials;
•
successful enrollment and completion of clinical trials, particularly where competitors may also be recruiting patients;
•
data from our clinical programs that supports an acceptable risk-benefit profile of our product candidates in the intended populations;
•
receipt and maintenance of marketing approvals from applicable regulatory authorities;
•
establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if one of our
product candidates is approved;
40
•
entry into collaborations to further the development of our product candidates;
•
obtaining and maintaining our portfolio of intellectual property rights, including patents, trade secrets and know-how;
•
enforcing and defending intellectual property rights and claims;
•
obtaining and maintaining regulatory exclusivity for our product candidates;
•
successfully launching commercial sales of our product candidates, if approved;
•
acceptance of the product candidate’s benefits and uses, if approved, by patients, the medical community and third-party payors;
•
the prevalence, duration and severity of potential side effects or other safety issues experienced with our product candidates prior to or
following any approval;
•
effectively competing with other therapies; and
•
obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors.
If we or our collaborators are not successful with respect to one or more of these factors in a timely manner or at all, we could experience significant delays
or an inability to successfully commercialize our current or future product candidates, which would materially harm our business. If we or our collaborators
do not receive marketing approvals for any of our product candidates, we may not be able to continue our operations.
Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely
affect our ability to obtain regulatory approvals or commercialize our product candidates on a timely basis or at all, which would have an adverse effect
on our business.
In order to obtain approval from the FDA or comparable foreign authorities to market a new small molecule product, we must demonstrate proof of safety
and efficacy in humans. To meet these requirements, we will have to conduct adequate and well-controlled clinical trials. Before we can commence clinical
trials for a product candidate, we must complete extensive preclinical studies that support our planned INDs in the United States. We cannot be certain of
the timely completion or outcome of our preclinical studies and cannot predict if the FDA or foreign authorities will accept our proposed clinical programs
or if the outcome of our preclinical studies will ultimately support further development of our programs. As a result, we cannot be sure that we will be able
to submit INDs or similar applications on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar applications will
result in the FDA or other regulatory authorities allowing additional clinical trials to begin.
Conducting preclinical testing is a lengthy, time-consuming and expensive process. The length of time may vary substantially according to the type,
complexity and novelty of the program, and often can be several years or more per program. Delays associated with programs for which we are directly
conducting preclinical studies may cause us to incur additional operating expenses. Moreover, we may be affected by delays or decisions to discontinue
development associated with the studies of certain programs that are the responsibility of our current or potential future collaborators over which we have
no control. The commencement and rate of completion of preclinical studies and clinical trials for a product candidate may be delayed by many factors,
including, for example:
•
inability to generate sufficient preclinical or other in vivo or in vitro data to support the initiation of clinical studies;
•
delays in reaching a consensus with regulatory agencies on study design and obtaining regulatory allowance or authorization to commence
clinical trials; and
•
obtaining sufficient quantities of starting materials, intermediate materials and our product candidates for use in preclinical studies and
clinical trials from third-party suppliers on a timely basis.
Moreover, even if clinical trials do begin for our preclinical programs, our development efforts may not be successful, and clinical trials that we conduct or
that third parties conduct on our behalf may not demonstrate sufficient safety or efficacy to obtain the requisite regulatory approvals for any of our product
candidates. Even if we obtain positive results from preclinical studies or initial clinical trials, we may not achieve the same success in future trials.
41
Historically, direct inhibition of any RAS protein has been challenging due to a lack of tractable, or “druggable,” binding pockets. Given this approach
is unproven, it may not be successful.
Historically, direct inhibition of any RAS protein has been challenging due to a lack of tractable, or “druggable,” binding pockets. Our tri-complex
technology has enabled us to design potent, cell-active inhibitors of multiple mutant RAS(ON) proteins. We are not aware of any programs in clinical
development that have successfully targeted any RAS(ON) protein. We cannot be certain that our approach will lead to the development of approvable or
marketable products, alone or in combination with other therapies.
The results of preclinical studies and early-stage clinical trials may not be predictive of future results.
The results of preclinical studies may not be predictive of the results of clinical trials, and the results of early-stage clinical trials may not be predictive of
the results of the later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having
progressed through preclinical studies and initial clinical trials. For example, historically, targeted therapies have been susceptible to resistance mutations in
cancer cells that facilitate escape from anti-tumor response. Should such resistance mutations arise in patients being treated with our product candidates, the
clinical benefit associated with those candidates may be compromised.
We recently initiated the RASolute 302 study and the RASolve 301 study with daraxonrasib, and are currently planning additional registrational clinical
trials for RMC-6236 and our other RAS(ON) inhibitors. These studies may not produce results that are consistent with expectations or that are predicted by
our earlier clinical observations for these compounds. Our plans for these and future planned registrational trials are, and will be based on our observations
from the results of early-stage clinical trials using the same product candidates. Based on data from early-stage clinical trials, we will select, subject to
regulatory feedback, the proposed indication, line of therapy, study design and dose and dose schedule for our registrational studies. However, these
registrational studies, if initiated, may not be successful and may not produce results that are consistent with our expectations, based on our earlier clinical
observations, including because other trial designs may have greater likelihood of development success.
There can be no assurance that any of our current or future clinical trials will ultimately be successful or support further clinical development of any of our
product candidates. There is a high failure rate for product candidates proceeding through clinical trials. A number of companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies. Even if clinical
trials with our product candidates are completed, the results may not be sufficient to obtain regulatory approval of any products.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
The timely completion of clinical trials in accordance with their protocols depends, among other things, on the ability to enroll a sufficient number of
patients who remain in the trial until its conclusion. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to
locate and enroll a sufficient number of eligible patients to participate in these trials to such trial’s conclusion as required by the FDA or other comparable
regulatory authorities. We or our future collaborators may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The
enrollment of patients depends on many factors, including:
•
the patient eligibility criteria defined in the protocol;
•
our ability to enroll a sufficient number of patients with mutations in the signaling pathways that our therapies are designed to target;
•
the size of the patient population required for analysis of the trial’s primary endpoints;
•
the proximity of patients to study sites;
•
the design of the trial;
•
the ability to recruit clinical trial investigators with the appropriate competencies and experience;
•
clinicians’ and patients’ perceptions as to the potential advantages of our product candidate being studied in relation to other available
therapies, including any new products that may be approved for the indications we are investigating;
•
the ability to obtain and maintain patient consents for participation in our clinical trials and, where appropriate, biopsies for future patient
enrichment efforts;
•
the risk that patients enrolled in clinical trials will not remain on the trial through the completion of evaluation; and
42
•
the ability of clinical trial investigators to enroll patients in cases of outbreak of disease, geopolitical or other conflicts or natural disasters,
including as a result of the ongoing war between Russia and Ukraine or escalation of conflicts in the Middle East.
In addition, our clinical trials will compete with approved therapies, including sotorasib and adagrasib, as well as other clinical trials for product candidates
that are in the same therapeutic areas (and that seek to evaluate patients with cancer cells having the same mutations), particularly for patients having
KRAS G12C or KRAS G12D mutations, as our current and potential future product candidates. This competition and competition with approved therapies
will reduce the number and types of patients available for clinical trials involving our product candidates, because some patients who might have opted to
enroll in our trials may instead opt to pursue a treatment regimen using an approved therapy or enroll in a trial conducted by one of our competitors.
Because the number of qualified clinical investigators is limited, we conduct some of our clinical trials at the same clinical trial sites that some of our
competitors use, which will reduce the number of patients who are available for our clinical trials at such sites. Moreover, because our current and potential
future product candidates may represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be
inclined to use conventional therapies, such as chemotherapy, rather than enroll patients in our ongoing or any future clinical trials.
Delays in patient enrollment may result in increased costs or may affect the timing or outcome of clinical trials, which could prevent completion of these
trials and adversely affect our ability to advance the development of our product candidates.
We and our collaborators are currently developing, and may in the future develop, our product candidates in combination with other therapies, which
exposes us to additional risks.
Some of our or our collaborators’ development efforts involve combinations of our product candidates with therapeutics that have been approved for
marketing by the FDA. For example, the development of our RAS(ON) inhibitors includes combinations with existing therapies, including chemotherapy
agents, an anti-EGFR agent and a PD-1 inhibitor. In the future our product candidates may be developed in combination with one or more additional
approved therapies. Even if any of our product candidates were to receive marketing approval or be commercialized for use in combination with other
existing therapies, we would continue to be subject to the risks that the FDA or similar regulatory authorities outside of the United States could revoke
approval of the other therapy used in combination with our product candidate, or that safety, efficacy, manufacturing or supply issues could arise with these
other therapies. Combination therapies are commonly used for the treatment of cancer, and we would be subject to similar risks if we develop any of our
product candidates for use in combination with other drugs or for indications other than cancer. This could result in our own products being removed from
the market or being less successful commercially. In addition, developing combination therapies using approved therapeutics, which we are doing and may
continue to do for our product candidates, exposes us to additional clinical risks, such as the requirement that we demonstrate the safety and efficacy of
each active component of any combination regimen we may develop, including any incremental benefits associated with our product candidates, which
may prove challenging.
We or our collaborators may also evaluate our current or future product candidates in combination with one or more other cancer therapies that have not
yet been approved for marketing by the FDA or similar regulatory authorities outside of the United States or with approved cancer therapies at an
unapproved dose and/or schedule, and/or with approved cancer therapies in unapproved indications. For example, the development of our RAS(ON)
inhibitors includes combinations with other product candidates in our portfolio, including other RAS(ON) inhibitors. We will not be able to market and sell
any of our product candidates in combination with any such cancer therapies, outside existing approved labels that do not ultimately obtain marketing
approval.
If the FDA or similar regulatory authorities outside of the United States do not approve the other therapies we choose to evaluate in combination with any
of our product candidates or revoke their approval of these other therapies, or if safety, efficacy, manufacturing or supply issues arise with these other
therapies, we may be unable to obtain approval of or market or our product candidates.
We face significant competition, and if our competitors develop and market products that are more effective, safer or less expensive than our product
candidates, our commercial opportunities will be negatively impacted.
The life sciences industry is highly competitive. We are currently developing therapies that will compete, if approved, with other products and therapies
that currently exist or are being developed. Products we may develop in the future are also likely to face competition from other products and therapies,
some of which we may not currently be aware of. We have competitors both in the United States and internationally, including major multinational
pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities and other research institutions. Many of
our competitors have significantly greater financial, manufacturing, marketing, product development, technical and human resources than we do. Large
pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining marketing approvals, recruiting patients and manufacturing
pharmaceutical products. These companies also have significantly greater research and marketing capabilities than we do and may also have products that
have been approved or are in late stages of development, and collaborative arrangements in our
43
target markets with leading companies and research institutions. Established pharmaceutical companies may also invest heavily to accelerate discovery and
development of novel compounds or to in-license novel compounds that could make our product candidates obsolete. Mergers and acquisitions in the
pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. As a result
of all of these factors, our competitors may succeed in obtaining patent protection and/or marketing approval or discovering, developing and
commercializing products in our field before we do.
There are a number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies.
These treatments consist of small molecule drug products, biologics, cell-based therapies and traditional chemotherapy. Smaller and other early-stage
companies may also prove to be significant competitors. In addition, academic research departments and public and private research institutions may be
conducting research on compounds that could prove to be competitive.
There are several programs in clinical development targeting KRAS G12C, including programs directed at KRAS(OFF) G12C being conducted by Amgen
Inc., Betta Pharmaceuticals Co., Ltd., Bristol Myers Squibb Company, Chengdu Huajian Future Technology Co. Ltd., D3 BIO, Inc., Eli Lilly, GenEros
Biopharma Ltd., Genhouse Bio Co. Ltd., Guangzhou BeBetter Medicine Technology Co., Ltd., HUYA Bioscience, Innovent Biologics, Inc. (licensed to
Genfleet Therapeutics), InventisBio, Jacobio Pharmaceuticals Co. Ltd., Jiangsu Hansoh Pharmaceutical Group Co., Ltd., Merck, Sharpe & Dohme LLC,
Roche, Shanghai Junshi Biosciences Co., Ltd., Shanghai YingLi Pharmaceutical, Shouyao Holdings (Beijing) Co. Ltd. and Suzhou Zelgen
Biopharmaceuticals. BridgeBio Pharma, Inc. and Frontier Medicines each have a dual KRAS(ON/OFF) G12C program in the clinic. There are also several
clinical programs directed at KRAS G12D, including those being conducted by Astellas Pharma Inc., AstraZeneca, Eli Lilly, Genentech, Incyte
Corporation, Jiangsu Hengrui Pharmaceuticals Company Ltd, Quanta Therapeutics, Tyligand Bioscience and Zelgen Biopharmaceuticals. In addition, there
are a few clinical programs directed at KRAS G12V, including those being conducted by Affini-T Therapeutics and Yingkai Saiwei (Beijing)
Biotechnology. Other clinical programs directed at mutant RAS, including pan-RAS inhibitors and Plk1 inhibitors, are being conducted, including those by
Alaunos Therapeutics, Inc., BeiGene, Boehringer Ingelheim, Cardiff Oncology, Chugai Pharmaceutical Co., Ltd., Eli Lilly, Elicio Therapeutics, Gritstone
bio, Inc., Moderna, Inc., Pfizer, Inc., Quanta Therapeutics, RasCal Therapeutics, Shanghai YingLi Pharmaceutical, Silenseed Ltd., Silexion Therapeutics
and Targovax ASA. There are several programs in clinical development targeting SHP2, including those being conducted by Betta Pharmaceuticals Co.,
Ltd., Etern BioPharma (Shanghai) Co. Ltd., Genhouse Bio Co. Ltd., Hutchmed Ltd., HUYA Bioscience, InnoCare Pharma Ltd., Jacobio Pharmaceuticals
Co. Ltd., Jiangsu Hansoh Pharmaceutical Group Co., Ltd., Nanjing Sanhome Pharmaceutical, Navire Pharma, Inc., a BridgeBio company (licensed to
Bristol Myers Squibb Company), Novartis AG, Relay Therapeutics, Inc. (licensed to Roche), Shanghai Gopherwood Biotech Co., Ltd., and Shanghai
Ringene Biopharma Co., Ltd. The above list includes corporate competitors that we are currently aware of and that are currently conducting clinical trials
or marketing in geographies where we currently anticipate conducting clinical trials for our product candidates. However, companies operating in other
geographies, smaller companies and companies with earlier stage programs may also prove to be significant competitors. In addition, academic research
departments and public and private research institutions may be conducting research on compounds that could prove to be competitive.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have
fewer or less severe effects, are more convenient, have a broader label, are marketed more effectively, are reimbursed or are less expensive than any
products that we may develop. Our competitors also may obtain FDA, EMA or other marketing approval for their products more rapidly than we may
obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Even if our
product candidates achieve marketing approval, they may be priced at a significant premium over competitive products if any have been approved by then,
resulting in reduced competitiveness.
Third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient
registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. In addition, the biopharmaceutical
industry is characterized by rapid technological change. If we fail to stay at the forefront of technological change, we may be unable to compete effectively.
Technological advances or products developed by our competitors may render our product candidates obsolete, less competitive or not economical.
Some of our programs focus on the discovery and development of “Beyond Rule of 5” small molecules. Such molecules can be associated with longer
development timelines and greater costs compared to traditional small molecule drugs. Our “Beyond Rule of 5” product candidates may take longer to
develop and/or manufacture relative to traditional small molecules, and we may not be able to formulate “Beyond Rule of 5” candidates for certain
routes of administration.
We enlist various technologies and capabilities that give us chemical access to challenging sites on target proteins that generally are not accessible using
conventional small molecule drug discovery approaches. For each target, we consider the specific structural, physico-chemical, functional and dynamic
properties of the target and deploy the approach or approaches that appear most likely to
44
yield viable development candidates. The “Rule of 5” is a set of criteria used in pharmaceutical drug development to determine whether chemical
compounds have certain physico-chemical properties that make them likely to be orally active drugs in humans. In some instances, the compounds we
discover and develop are traditional small molecules (i.e., less than 500 daltons) with properties that generally satisfy conventional pharmaceutical “Rule of
5” criteria, while in other cases, they are larger (i.e., more than 500 daltons) “Beyond Rule of 5” (BRo5) compounds that do not satisfy these criteria. For
example, our mTORC1 program and our RAS(ON) inhibitors each include pursuit of BRo5 compounds.
BRo5 compounds have been successfully pursued by many pharmaceutical companies. Examples of BRo5 compounds include natural products and semi-
synthetic derivatives, peptidomimetics, macrocycles and degraders. However, larger molecular weight small molecules often cannot be formulated into
orally absorbed drugs and also often face solubility, potency, bioavailability and stability challenges, among others. In addition, many of the commonly
used predictive and other drug development tools are designed specifically for traditional “Rule of 5” small molecule drugs rather than BRo5 molecules,
contributing to the difficulty and uncertainty of development of BRo5 compounds.
Due to their size and complexity, drug development of our BRo5 compounds may be slower and/or more expensive than drug development of traditional
“Rule of 5” compounds, resulting in program delays, increased costs or failure to obtain regulatory approval in a commercially reasonable timeframe, if at
all. Our competitors developing traditional small molecules in areas where we are developing BRo5 compounds could obtain regulatory approval and reach
the market before we do. Even if we succeed in generating an approved drug from a BRo5 compound, it may be less convenient to administer, have higher
grade and/or more frequent side effects or be more costly to manufacture and formulate than competing products on the market. The discovery and
development of BRo5 small molecules may pose risks to us such as:
•
BRo5 small molecules may present difficult synthetic chemistry and manufacturing challenges, including with any scale-up of our product
candidates in sufficient quality and quantity;
•
BRo5 small molecules may be challenging to purify, including with any scale-up of our product candidates in sufficient quality and quantity;
•
BRo5 small molecules may present solubility challenges;
•
BRo5 small molecules may present oral absorption challenges due to low passive permeability, and may not achieve acceptable oral
bioavailability for development and may result in poor pharmaceutical properties for formulation development;
•
BRo5 small molecules may present cell permeability challenges, especially with regards to lipophilicity, hydrogen bond donor and rotatable
bond count, and high topological polar surface area;
•
BRo5 small molecules may have a propensity to be substrates for efflux proteins such as the adenosine triphosphate (ATP) binding cassette
(ABC) transporter protein family, including multidrug resistance protein 1. Cancer cells may overexpress these transporter proteins causing
an increase in expulsion of BRo5 small molecules from the cell. For example, as the site of action of our RAS(ON) inhibitors is inside the
cell, expulsion by these transporter proteins may decrease the effective concentration in the cell sufficiently to reduce target inhibition and
thereby render a RAS-dependent tumor less susceptible to the inhibitory activity of a BRo5 small molecule, such as our product candidates;
•
BRo5 small molecules may present central nervous system (CNS) penetration challenges due to low passive permeability and/or interaction
with efflux transporters at the blood-brain barrier and this could limit sensitivity of CNS tumors to BRo5 small molecules;
•
BRo5 small molecules may present formulation vehicle challenges for administration, such as intravenous and subcutaneous administration,
due to aspects such as solubility and hydrophobicity;
•
BRo5 small molecules may present stability and shelf-life limitations due to the incorporation of labile functionality in their scaffolds,
including for example in the development of RMC-5552 which currently requires a cold chain storage of zero degrees Celsius; and
•
BRo5 small molecules may present off-target toxicities due to physico-chemical properties such as lipophilicity, which is the ability to
dissolve fats, oils and lipids, the presence of off-target pharmacophores in the molecule that can interact with other cellular proteins, or other
characteristics that have not been fully characterized within a novel chemical scaffold or platform.
45
These and other risks related to our research and development of BRo5 small molecules may result in delays in development, an increase in development
costs and/or the failure to develop any BRo5 small molecule to approval. As a result, our competitors may develop products more rapidly and cost
effectively than we do if they are able to target the same indications as our product candidates using conventional small molecules. In particular,
competitors may develop and commercialize products that compete with our RAS(ON) inhibitor product candidates.
The regulatory approval processes of the FDA, the EMA and comparable foreign authorities are lengthy, time-consuming and inherently
unpredictable, and if we or our potential future collaboration partners are ultimately unable to obtain regulatory approval for our product candidates,
our business will be substantially harmed.
The time required to obtain approval by the FDA, the EMA and comparable foreign authorities is unpredictable but typically takes many years following
the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition,
approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s
clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate, and it is possible that none of
our current or future product candidates will ever obtain regulatory approval.
Our current and future product candidates could fail to receive regulatory approval for many reasons, including the following:
•
the FDA, the EMA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;
•
we may be unable to demonstrate to the satisfaction of the FDA, the EMA or comparable foreign regulatory authorities that a product
candidate is safe or effective for its proposed indication or indications;
•
the results of clinical trials may not meet the level of statistical significance required by the FDA, the EMA or comparable foreign regulatory
authorities for approval;
•
we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
•
the FDA, the EMA or comparable foreign regulatory authorities may disagree with our interpretation of data from clinical trials or preclinical
studies;
•
the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA to the FDA or
other submission or to obtain regulatory approval in the United States, the European Union (EU) or elsewhere;
•
the FDA, the EMA or comparable foreign regulatory authorities may find deficiencies with or fail to approve the manufacturing processes or
facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and
•
the approval policies or regulations of the FDA, the EMA or comparable foreign regulatory authorities may significantly change in a manner
rendering our clinical data insufficient for approval.
This lengthy approval process as well as the unpredictability of clinical trial results may result in our or our future collaborators’ failure to obtain regulatory
approval to market any of our product candidates. The FDA, the EMA and other comparable foreign authorities have substantial discretion in the approval
process, and determining when or whether regulatory approval will be obtained for any product candidate that we develop. Even if we believe the data
collected from future clinical trials of our product candidates are promising, this data may not be sufficient to support approval by the FDA, the EMA or
any other regulatory authority.
In addition, even if we or our future collaborators were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or
more limited indications than we have sought, may not approve the prices we may desire to charge for our products, may grant approvals contingent on the
performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or
desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the prospects for our
product candidates.
Further, we have not previously submitted an NDA to the FDA, or a Marketing Authorization Application (MAA) to the EMA or any other regulatory
authority. We cannot be certain that any of our programs will be successful in clinical trials or receive regulatory approval. Further, our product candidates
may not receive regulatory approval even if they are successful in clinical trials. If we do not receive regulatory approvals for our product candidates, we
may not be able to continue our operations.
46
Clinical product development involves a lengthy and expensive process, with uncertain outcomes. We or our potential future collaboration partners
may experience delays in completing, or ultimately be unable to complete, the development and commercialization of our current and future product
candidates.
To obtain the requisite regulatory approvals to commercialize any of our product candidates, we must demonstrate through extensive preclinical studies and
clinical trials that our products are safe or effective in humans. Clinical testing is expensive and can take many years to complete, and its outcome is
inherently uncertain. Failure can occur at any time during the clinical trial process, and future clinical trials involving our product candidates may not be
successful.
We may experience delays in completing our clinical trials or preclinical studies and initiating or completing additional clinical trials. We may also
experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to complete these clinical trials on the timelines we
expect or otherwise delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:
•
actions by regulators, institutional review boards (IRBs) or ethics committees, which may cause us or our investigators to not commence or
conduct a clinical trial at a prospective trial site or at all sites and cause us to pause or stop an in-process clinical trial;
•
delays in reaching, or failing to reach, agreement on acceptable terms with prospective trial sites and prospective contract research
organizations (CROs);
•
delays in identifying, recruiting and training suitable clinical investigators;
•
the number of patients required for clinical trials being larger than we anticipate;
•
difficulty enrolling a sufficient number of patients for our clinical trials or enrollment in our trials being slower than we anticipate, including
in both cases because appropriate patients must have the relevant mutations in the signaling pathways our therapies are designed to target;
•
participants dropping out of our clinical trials or failing to return for post-treatment follow-up at a higher rate than we anticipate;
•
patients or investigators not complying with our clinical trial protocols, particularly with respect to intermittent dosing, which we are
evaluating for our product candidates;
•
subjects experiencing severe or serious unexpected drug-related adverse effects;
•
occurrence of serious adverse events in trials of the same class of agents conducted by other companies that could be considered similar to
our product candidates;
•
selection of clinical endpoints that require prolonged periods of clinical observation or extended analysis of the resulting data;
•
our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or
at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or
investigators;
•
the supply or quality of materials for our product candidates or other materials necessary to conduct clinical trials may be insufficient or
inadequate;
•
lack of adequate funding to continue a clinical trial, or costs being greater than we anticipate; and
•
our collaborators may delay the development process by waiting to take action or focusing on other priorities.
We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or ethics committees of the institutions in which any such trial is
being conducted, by the data safety monitoring board for such trial or by the FDA or other regulatory authorities. Such authorities may impose such a
suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our
clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical
hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product, changes in government regulations or
administrative actions or lack of adequate funding to continue the clinical trial. Many of the factors that cause, or lead to, a delay in the commencement or
completion of clinical trials may also ultimately lead to the denial of marketing approval of our product candidates.
Further, conducting clinical trials in foreign countries, as we or our collaborators may do for our current or future product candidates, presents additional
risks that may delay completion of our clinical trials. These risks include the failure of enrolled subjects in foreign
47
countries to adhere to clinical protocols as a result of differences in healthcare services or cultural customs, managing additional administrative burdens
associated with foreign regulatory schemes, and political and economic risks, including war, relevant to these foreign countries.
Principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection
with their services. Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory
authorities. The FDA or comparable foreign regulatory authority may conclude that a financial relationship between us and a principal investigator has
created a conflict of interest or otherwise affected interpretation of the study. The FDA or comparable foreign regulatory authority may therefore question
the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay
in approval, or rejection, of marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, for our product candidates
and may ultimately lead to the denial of regulatory approval of one or more of our product candidates.
If we or our collaborators experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects
of our product candidates will be harmed, and our ability to generate revenues from any of these product candidates will be delayed. In addition, any delays
in completing clinical trials for our product candidates will increase our costs, slow down our product candidate development and approval process and
jeopardize our ability to commence product sales and generate revenues. Clinical trial delays could also allow our competitors to bring products to market
before we do or shorten any periods during which we have the exclusive right to commercialize our product candidates and impair our ability to
commercialize our product candidates.
In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change, and additional government regulations may be
enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation (CTR), which was
adopted in April 2014 and repealed the EU Clinical Trials Directive, became applicable on January 31, 2022, with a three-year transition period. The CTR
provides for a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single
submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment
procedure of the clinical trial application (CTA) has been harmonized as well, including a joint assessment by all member states concerned, and a separate
assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is
communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. As of February 1, 2025,
all clinical trials (including those which are ongoing) in the EU are subject to the provisions of the CTR. Compliance with the CTR requirements by us and
our third-party service providers, such as our CROs, may impact our development plans.
The United Kingdom’s (UK) regulatory framework in relation to clinical trials is derived from pre-existing EU legislation (as implemented into UK law,
through secondary legislation). Whether the regulation of clinical trials in the UK will mirror the (EU) CTR in the long term is not yet certain; however, in
December 2024, the UK government introduced a legislative proposal, the Medicines for Human Use (Clinical Trials) Amendment Regulations 2024, that,
if implemented, will replace the current regulatory framework for clinical trials in the UK. The legislative proposal aims to provide a more flexible regime
to make it easier to conduct clinical trials in the UK, increase the transparency of clinical trials conducted in the UK and make clinical trials more patient
centered. The UK government has provided the legislative proposal to the UK Parliament for its review and approval. Once the legislative proposal is
approved (with or without amendment), it will be adopted into UK law which is expected in early 2026. A decision by the UK government not to closely
align any new legislation with the new approach that has been adopted in the EU may have an effect on the cost of conducting clinical trials in the UK as
opposed to countries in the EU.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our
development plans may be impacted.
Many of the factors described above that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the
denial of regulatory approval of our product candidates or result in the development of our product candidates being stopped early.
Interim, “topline” and preliminary data from our clinical trials may differ materially from the final data.
From time to time, we may disclose interim data from our clinical trials. For example, we have reported interim Phase 1 single agent clinical data for
daraxonrasib, elironrasib and zoldonrasib. In each case, this interim data included a limited number of patients and time of exposure to the study drug.
Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes
48
may materially change as patient enrollment continues and more data on existing patients become available. When a clinical trial is ongoing, the final
results from the trial may be materially different from those reflected in any interim data we report.
From time to time, we may also publicly disclose preliminary or “topline” data from our clinical trials, which are based on a preliminary analysis of then-
available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the
particular trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, including decisions to initiate pivotal
clinical trials based on then-available data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the
topline results that we report may differ from future results of the same clinical trials, or different conclusions or considerations may qualify such topline
results once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in
the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the
final data are available.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may
interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the
particular product candidate or product and the value of our company in general. In addition, the information we choose to publicly disclose regarding a
particular study or clinical trial is typically a summary of extensive information, and you or others may not agree with what we determine is the material or
otherwise appropriate information to include in our disclosure. Any information we determine not to disclose may ultimately be deemed significant with
respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business. If the topline data
that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval
for, and commercialize, our product candidates may be harmed.
Our current or future product candidates may cause undesirable side effects or have other properties when used alone or in combination with other
approved products or investigational new drugs that could delay or halt their clinical development, prevent their marketing approval, limit their
commercial potential or result in significant negative consequences.
Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable or clinically
unmanageable side effects could occur and cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive
label or the delay or denial of marketing approval by the FDA or comparable foreign regulatory authorities. Any treatment-related side effects could also
affect patient recruitment in the relevant trial or other current or future trials involving the same product candidate or other product candidates, or the ability
of enrolled patients to complete the trial, and could result in potential product liability claims.
For example, the safety and tolerability data we have released from the daraxonrasib, elironrasib and zoldonrasib studies included adverse events (AEs),
including serious adverse events (SAEs) and AEs that led to dose interruption or reduction.
Although our current and future product candidates will undergo safety testing to the extent possible and, where applicable, under such conditions
discussed with regulatory authorities, not all adverse effects of drugs can be predicted or anticipated.
Unforeseen side effects could arise either during clinical development or, if such side effects are rarer, following approval or commercialization after
exposure to additional patients. So far, we have not demonstrated that our product candidates are safe in humans, and we cannot predict if ongoing or future
clinical trials will do so.
Furthermore, certain of our product candidates are currently being, and may in the future be, co-administered with approved or experimental therapies.
These combinations may have additional side effects, including those that could lead us to discontinue the studies. The uncertainty resulting from the use of
our product candidates in combination with other therapies may make it difficult to accurately predict side effects in future clinical trials.
If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by such products, a number of
potentially significant negative consequences could result, including:
•
regulatory authorities may withdraw their approval of the product;
•
we may be required to recall a product or change the way such product is administered to patients;
•
additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any
component thereof;
•
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
49
•
we may be required to implement a risk evaluation and mitigation strategy (REMS) or create a medication guide outlining the risks of such
side effects for distribution to patients;
•
we could be sued and held liable for harm caused to patients;
•
the product may become less competitive; and
•
our reputation may suffer.
Any of the foregoing events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved. In addition,
if one or more of our product candidates prove to be unsafe, our entire technology platform and pipeline could be affected.
Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain
and may prevent us or any of our existing or potential future collaboration partners from obtaining approvals for the commercialization of any of our
product candidates.
Any of our current or future product candidates and the activities associated with their development and commercialization, including their design, testing,
manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, and distribution, are subject to comprehensive
regulation by the FDA and other regulatory authorities in the United States and by comparable authorities in other countries. Failure to obtain marketing
approval for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction. We have not received approval to
market any product candidates from regulatory authorities in any jurisdiction, and it is possible that none of our current or future product candidates will
ever obtain regulatory approval. We have no experience submitting and supporting the applications necessary to gain marketing approvals and expect to
rely on third-party CROs or regulatory consultants to assist us in this process. Securing regulatory approval requires the submission of extensive preclinical
and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety
and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of
manufacturing facilities by, the relevant regulatory authority. Any of our product candidates may not be effective, may be only moderately effective, or
may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent
or limit commercial use.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are
required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity, and novelty of the product
candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or
regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. For
instance, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe
initiative, launched by the European Commission in November 2020. The European Commission’s proposal for revision of several legislative instruments
related to medicinal products was published in April 2023, and would, among other things, potentially reduce the duration of regulatory data protection and
revise the eligibility for expedited pathways. The proposed revisions remain to be agreed and adopted by the European Parliament and European Council
and the proposals may therefore be substantially revised before adoption, which is not anticipated before early 2026. The revisions may, however, have a
significant long-term impact on the biopharmaceutical industry.
The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may
decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data
obtained from preclinical and clinical testing could delay, limit, or prevent marketing approval of a product candidate. Any marketing approval we or our
potential future collaboration partners ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved
product not commercially viable.
If we or potential future collaboration partners experience delays in obtaining approval or if we fail to obtain approval of any of our current or future
product candidates, the commercial prospects for those product candidates may be harmed.
50
Obtaining and maintaining marketing approval of our current and future product candidates in one jurisdiction does not mean that we or our potential
future collaboration partners will be successful in obtaining marketing approval of our current and future product candidates in other jurisdictions.
Obtaining and maintaining marketing approval of our current and future product candidates in one jurisdiction does not guarantee that we or our potential
future collaboration partners will be able to obtain or maintain marketing approval in any other jurisdiction, while a failure or delay in obtaining marketing
approval in one jurisdiction may have a negative effect on the marketing approval process in others. For example, even if the FDA grants marketing
approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion
of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods
different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical studies conducted in one
jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must
be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that may be charged for the products is also
subject to approval.
We and our potential future collaboration partners may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside
of the United States have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining
foreign marketing approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could
delay or prevent the introduction of our products in certain countries. If we or our potential future collaboration partners fail to comply with the regulatory
requirements in international markets or receive applicable marketing approvals in international markets, the target market for our product candidates will
be reduced, and our ability to realize the full market potential of our product candidates will be harmed.
Adverse events in the field of oncology or the biopharmaceutical industry could damage public perception of our current or future product candidates
and negatively affect our business.
The commercial success of our products will depend in part on public acceptance of the use of targeted cancer therapies. While a number of targeted cancer
therapies have received regulatory approval and are being commercialized, our approach to targeting cancer cells carrying tumor causing mutations,
including oncogenic RAS(ON) pathway mutations, is novel and unproven. Adverse events in clinical trials of our product candidates, or post-marketing
activities, or in clinical trials of others developing similar products or that are related to approved targeted therapies, particularly those targeting oncogenic
RAS pathway mutations, including sotorasib and adagrasib and the resulting publicity, as well as any other adverse events in the field of oncology that may
occur in the future, could result in a decrease in demand for any product that we may develop. If public perception is influenced by claims that the use of
cancer therapies is unsafe, whether related to our therapies or those of our competitors, our product candidates or products, if approved, may not be
accepted by the general public or the medical community.
Future adverse events in oncology or the biopharmaceutical industry could also result in greater government regulation, stricter labeling requirements and
potential regulatory delays in the testing or approvals of our products. Any increased scrutiny could delay or increase the costs of obtaining marketing
approval for our current or future product candidates.
Even if we or our potential future collaboration partners receive marketing approval of a product candidate, we will be subject to ongoing regulatory
obligations and continued regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply
with regulatory requirements or experience unanticipated problems with our products, if approved.
Any marketing approvals that we or our potential future collaboration partners receive for any current or future product candidate may be subject to
limitations on the approved indicated uses for which the product may be marketed or the conditions of approval, or contain requirements for potentially
costly post-market testing and surveillance to monitor the safety and efficacy of the product candidate. The FDA may also require REMS as a condition of
approval of any product candidate, which could include requirements for a medication guide, physician communication plans or additional elements to
ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign
regulatory authority approves a product candidate, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage,
advertising, promotion, import and export and record keeping for the product will be subject to extensive and ongoing regulatory requirements. These
requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current
Good Manufacturing Practice (cGMP) or similar foreign requirements and Good Clinical Practice (GCP) for any clinical trials that we conduct post-
approval. Later discovery of previously unknown problems with any
51
approved candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or
failure to comply with regulatory requirements, may result in, among other things:
•
restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or product recalls;
•
restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials;
•
fines, untitled and warning letters, or holds on clinical trials;
•
refusal by the FDA or comparable foreign authorities to approve pending applications or supplements to approved applications or suspension
or revocation of approvals;
•
product seizure or detention, or refusal to permit the import or export of the product; and
•
injunctions or the imposition of civil or criminal penalties.
The occurrence of any event or penalty described above may inhibit our or our potential future collaboration partners’ ability to commercialize our product
candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity.
The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay
marketing approval of a product. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or
administrative action, either in the United States or abroad. If we or our collaborators are slow or unable to adapt to changes in existing requirements or the
adoption of new requirements or policies, or are not able to maintain regulatory compliance, we may lose any marketing approval that we may have
obtained.
Even if a current or future product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians,
patients, third-party payors and others in the medical community necessary for commercial success.
If any of our current or future product candidates receives marketing approval, whether as a single agent or in combination with other therapies, it may
nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors, and others in the medical community to be a viable
product. For example, current approved immunotherapies, and other cancer treatments like chemotherapy and radiation therapy, are well established in the
medical community, and doctors may continue to rely on these therapies. The degree of market acceptance of any product candidate, if approved for
commercial sale, will depend on a number of factors, including:
•
efficacy and potential advantages compared to alternative treatments;
•
the ability to offer our products, if approved, for sale at competitive prices;
•
convenience and ease of administration compared to alternative treatments;
•
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
•
the strength of marketing and distribution support;
•
the ability to obtain sufficient third-party coverage and adequate reimbursement, including with respect to the use of the approved product as
a combination therapy;
•
adoption of a companion diagnostic and/or complementary diagnostic (if any); and
•
the prevalence and severity of any side effects.
The market opportunities for any of our current or future product candidates, if and when approved, may be limited to those patients who are ineligible
for established therapies or for whom prior therapies have failed, and may be small.
Cancer therapies are sometimes characterized as first-line, second-line or third-line. When cancer is detected early enough, first-line therapy— usually
chemotherapy, hormone therapy, surgery, radiation therapy or a combination of these— is sometimes adequate to cure the cancer or prolong life without a
cure. Second- and third-line therapies are administered to patients when prior therapy is not effective. We expect to initially seek approval of our product
candidates as a therapy for patients who have received one or more prior treatments. Subsequently, for those products that prove to be sufficiently
beneficial, if any, we would expect to seek approval potentially as a first-line therapy, but there is no guarantee that our product candidates, even if
approved, would be approved for first-line therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.
52
The number of patients who have the cancers we are targeting, including those with the necessary mutations, may turn out to be lower than expected.
Additionally, the potentially addressable patient population for our current programs or future product candidates may be limited, if and when approved.
Even if we obtain significant market share for any product candidate, if and when approved, if the potential target populations are small, we may never
achieve commercial success without obtaining marketing approval for additional indications, including to be used as first-line therapy.
Even if we are able to commercialize any product candidates, such products may become subject to unfavorable pricing regulations or third-party
coverage and reimbursement policies.
The regulations that govern marketing approvals, pricing and reimbursement for new products vary widely from country to country. Some countries require
approval of the sale price of a product before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted. In
some foreign markets, prescription pharmaceutical pricing remains subject to continuing government control even after initial approval is granted. As a
result, we or our potential future collaboration partners might obtain marketing approval for a product candidate in a particular country, but then be subject
to price regulations that delay the commercial launch of the product candidate, possibly for lengthy time periods, and negatively impact the revenues we are
able to generate from the sale of the product candidate in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one
or more product candidates, even if our product candidates obtain marketing approval.
Our and our potential future collaboration partners’ ability to commercialize any product candidates, whether as a single agent or combination therapy,
successfully will also depend in part on the extent to which coverage and reimbursement for these product candidates and related treatments will be
available from government authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private
health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.
It is difficult to predict at this time what government authorities and third-party payors will decide with respect to coverage and reimbursement for our
programs.
There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, as the process is time-consuming and costly, and
coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Additionally, no
uniform policy requirement for coverage and reimbursement for drug products exists among third-party payors in the United States, which may result in
coverage and reimbursement for drug products that can differ significantly from payor to payor. Moreover, eligibility for reimbursement does not imply
that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim
reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may
vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and
may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by
government healthcare programs or private payors and by any future relaxation of existing laws that restrict imports of drugs from countries where they
may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their
own reimbursement policies.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control
costs by limiting coverage and the amount of reimbursement for particular products and requiring substitutions of generic products and/or biosimilars.
Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the
prices charged for drugs. We cannot be sure that coverage will be available for any of our product candidates, even if approved, and, if coverage is
available, the level of reimbursement. These third-party payors are also examining the cost-effectiveness of drugs in addition to their safety and efficacy.
Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not
available or is available only to limited levels, we or our potential third party collaborators may not be able to successfully commercialize any product
candidate even if approved.
53
We may fail to select or capitalize on the most scientifically, clinically and commercially promising or profitable drug candidates including mutant
RAS(ON) targets.
We have limited technical, managerial and financial resources to determine which of our potential assets, including our RAS(ON) inhibitors, should be
advanced into further preclinical development, initial clinical trials, later-stage clinical development and potential commercialization. From our RAS(ON)
inhibitors, we have selected RMC-6236, our RAS(ON) multi-selective inhibitor, RMC-6291, our RAS(ON) G12C-selective inhibitor and RMC-9805, our
inhibitor targeting KRAS(ON) G12D as the first RAS(ON) inhibitor candidates for clinical evaluation. In making these prioritization decisions and
selecting development candidates from our preclinical assets, we may make incorrect determinations. Our decisions to allocate our research and
development, management and financial resources toward particular development candidates or therapeutic areas, including the RASolute 302 study, the
RASolve 301 study and other pivotal trials, may not lead to the development of viable commercial products and may divert resources from better
opportunities. Similarly, our decisions to delay or terminate development programs may also be incorrect and could cause us to miss valuable
opportunities.
We may not be successful in our efforts to identify or discover other product candidates and may fail to capitalize on programs, product candidates or
indications or lines of therapy for which there is a greater likelihood of success or that may present a greater commercial opportunity.
The success of our business depends upon our ability to identify, develop and commercialize product candidates. Research programs to identify new
product candidates require substantial technical, financial and human resources, and we may fail to identify potential product candidates for numerous
reasons.
Additionally, because we have limited resources and because of the decisions we make based on our observations from the results of earlier-stage clinical
trials, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications or lines of therapy that later prove to
have a greater likelihood of success or for which there is greater commercial potential. For example, we may design our clinical trials, including our pivotal
clinical trials, based on our observations from earlier-stage clinical trials. In doing so, we may make decisions regarding our study design, including our
selection of the inclusion and exclusion criteria and endpoints, as well as our selection of dose and dose schedule and other factors, for those trials, while
other study designs and dosing regimens may have a greater likelihood of success.
However, the advancement of a particular product candidate may ultimately prove to be unsuccessful or less successful than another program in our
pipeline that we might have chosen to pursue on a less aggressive basis. Our estimates regarding the potential market for our product candidates could be
inaccurate, and our spending on current and future research and development programs may not yield any commercially viable products. If we do not
accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that product candidate through
collaboration, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole development and
commercialization rights to such product candidate. Alternatively, we may allocate internal resources to a product candidate in a therapeutic area in which
it would have been more advantageous to enter into a partnering arrangement.
If any of these events occur, we may be forced to abandon or delay our development efforts with respect to a particular product candidate or fail to develop
a potentially successful product candidate.
We may need to use existing commercial diagnostic tests or develop, or enter into a collaboration or partnership to develop, novel complementary
diagnostics and/or novel companion diagnostics for some of our current or future product candidates. If we or our partners are unable to successfully
develop these companion diagnostics or complementary diagnostics, or experience significant delays in doing so, we may not realize the full
commercial potential of our future product candidates.
As one of the key elements of our product development strategy, we seek to identify cancer patient populations that may derive meaningful benefit from
our current or future product candidates. Because predictive biomarkers may be used to identify the right patients for our programs and our current or
future product candidates, we believe that our success may depend, in part, on our ability to use existing diagnostic tests from third parties or develop novel
complementary diagnostics and/or novel companion diagnostics in collaboration with partners.
In the event that novel tests will need to be developed, we have little experience in the development of diagnostics. We expect to rely on partners in
developing appropriate diagnostics to pair with our current or future product candidates. We may be unsuccessful in entering into or maintaining
collaborations for the development of companion diagnostics for use with our current or future product candidates in our markets of interest.
54
Complementary diagnostics and companion diagnostics are subject to regulation by the FDA and similar regulatory authorities outside the United States as
medical devices and require separate regulatory approval, clearance or certification prior to commercialization. In addition, if the FDA determines that a
companion diagnostic device is essential to the safe and effective use of a novel therapeutic product or indication, the FDA generally will not approve the
therapeutic product or new therapeutic product indication if the companion diagnostic is not also approved or cleared for that indication. Companion
diagnostics are developed in conjunction with clinical programs for the associated therapeutic product, and the FDA has generally required premarket
approval of companion diagnostics for cancer therapies. The approval or clearance of a companion diagnostic as part of the therapeutic product’s further
labeling limits the use of the therapeutic product to only those patients who express the specific characteristic, such as a biomarker, that the companion
diagnostic was developed to detect.
If we, our partners, or any third parties that we engage to assist us, are unable to successfully develop complementary diagnostics and/or companion
diagnostics for our product candidates and any future product candidates, or we experience delays in doing so:
•
the development of our product candidates and any other future product candidates may be adversely affected if we are unable to
appropriately select patients for enrollment in our clinical trials;
•
we may be unable to obtain approval for any of our product candidates for which the FDA or foreign regulatory authority has determined a
companion diagnostic is required; and
•
we may not realize the full commercial potential of our product candidates and any other future product candidates that receive marketing
approval if, among other reasons, we are unable to appropriately identify, or it takes us longer to identify, patients who are likely to benefit
from therapy with our products, if approved.
Even if we or our current or future partners are successful in the development of diagnostics for use with our current or future product candidates, there are
also risks associated with the commercial supply of these diagnostics.
We may seek and fail to obtain fast track or breakthrough therapy designations for our current or future product candidates. Even if we are successful,
these programs may not lead to a faster development or regulatory review process, and they do not guarantee we will receive approval for any product
candidate.
If a product is intended for the treatment of a serious or life-threatening condition, and preclinical or clinical data demonstrate the potential to address an
unmet medical need for this condition, the product sponsor may apply for fast track designation. Specifically, drugs are eligible for fast track designation if
they are intended, alone or in combination with one or more drugs or biologics, to treat a serious or life-threatening disease or condition and demonstrate
the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product candidate and the
specific indication for which it is being studied. The sponsor of a fast track product candidate has opportunities for more frequent interactions with the
applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority review. An NDA
submitted for a fast track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a
rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees
to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first
section of the application.
The FDA has broad discretion whether to grant fast track designation, so, even if we believe a particular product candidate is eligible for this designation,
the FDA may reach a different conclusion and not grant it. Even if we do receive fast track designation, we may not experience a faster development
process, review or approval compared to conventional FDA procedures. The FDA may rescind any fast track designation if it believes that the designation
is no longer supported by data from our clinical development program.
We may also seek breakthrough therapy designation for our product candidates. A breakthrough therapy is defined as a drug that is intended, alone or in
combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the
drug may demonstrate substantial improvement over currently existing therapies on one or more clinically significant endpoints, such as substantial
treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies, increased interaction
and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the
number of patients placed in ineffective control regimens. Drugs and biologics designated as breakthrough therapies also receive the same benefits
associated with fast track designation, including eligibility for rolling review of a submitted NDA, if the relevant criteria are met. Like fast track
designation, breakthrough therapy designation is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the
criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of
breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered
for approval under conventional FDA procedures and
55
does not assure ultimate approval by the FDA. In addition, even if a product candidate qualifies as a breakthrough therapy, the FDA may later decide that
the drug no longer meets the conditions for qualification and rescind the designation.
Jurisdictions where we may seek to pursue product candidates outside of the United States have processes similar to the breakthrough designation and fast
track processes described above, and to the extent we or our collaborators desire to enter these markets, we will face similar risks and challenges as those
described in the United States.
We may attempt to secure approval from the FDA through the use of the accelerated approval pathway. If we are unable to obtain this approval, we
may be required to conduct additional preclinical studies or clinical trials beyond those that we contemplate, which could increase the expense of
obtaining, and delay the receipt of, necessary regulatory approvals. Even if we receive accelerated approval from the FDA, if our confirmatory trials do
not verify clinical benefit, or if we do not comply with rigorous post-marketing requirements, the FDA may seek to withdraw any accelerated approval
we have obtained.
We may in the future seek accelerated approval for one or more of our product candidates. Under the accelerated approval program, the FDA may grant
accelerated approval to a product candidate designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over
available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably
likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a
given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory
measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit.
An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably
likely to predict an effect on irreversible morbidity or mortality or other clinical benefit.
The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic
advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on
the sponsor’s agreement to conduct, in a diligent manner, additional confirmatory studies to verify and describe the drug’s clinical benefit. If such post-
approval studies fail to confirm the drug’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an
expedited basis. In addition, in December 2022, President Biden signed an omnibus appropriations bill to fund the U.S. government through fiscal year
2023. The omnibus bill included the Food and Drug Omnibus Reform Act of 2022, which, among other things, provided the FDA new statutory authority
to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval. Under these provisions, the
FDA may require a sponsor of a product seeking accelerated approval to have a confirmatory trial underway prior to such approval being granted.
Prior to seeking accelerated approval for any of our product candidates, we intend to seek feedback from the FDA and will otherwise evaluate our ability to
seek and receive accelerated approval. There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or
submit an NDA for accelerated approval or any other form of expedited development, review or approval. Furthermore, if we decide to submit an
application for accelerated approval for our product candidates, there can be no assurance that such application will be accepted or that any expedited
development, review or approval will be granted on a timely basis, or at all. The FDA or other comparable foreign regulatory authorities could also require
the conduct of further studies prior to considering our (or one of our potential future collaboration partners’) applications or granting approval of any type.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for our product candidate would result in a longer
time period until commercialization of such product candidate, if at all, could increase the cost of development of such product candidate and could harm
our competitive position in the marketplace.
We may seek orphan drug designation for our product candidates, and we may be unsuccessful or may be unable to maintain the benefits associated
with orphan drug designation, including the potential for market exclusivity.
As part of our business strategy, we may seek orphan drug designation for our product candidates. Regulatory authorities in some jurisdictions, including
the United States, may designate drugs for relatively small patient populations as orphan drugs or, in the EU, orphan medicinal products. Under the Orphan
Drug Act, the FDA may designate a drug as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a
patient population of fewer than 200,000 individuals annually in the United States, or a patient population greater than 200,000 in the United States where
there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the United States, orphan drug
designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.
Similarly, in the EU, the European Commission grants orphan medicinal product designation after receiving the opinion of the EMA Committee for
Orphan Medicinal Products on an orphan medicinal product designation application. Orphan medicinal product designation is intended to promote the
development of medicines (1) that are intended for the diagnosis, prevention or treatment of
56
life-threatening or chronically debilitating conditions where (2) either (a) such conditions affect no more than 5 in 10,000 persons in the EU when the
application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify the
investment needed for its development; and (3) for which no satisfactory method of diagnosis, prevention, or treatment has been authorized (or if such
method exists, the product would be a significant benefit to those affected). In the EU, orphan designation entitles a party to a number of incentives, such as
protocol assistance and scientific advice specifically for designated orphan medicines, and potential fee reductions depending on the status of the sponsor.
Generally, if a drug with an orphan drug designation subsequently receives the first marketing approval for the disease or condition for which it has such
designation, the drug is entitled to a period of marketing exclusivity, which precludes the FDA or foreign authorities from approving another marketing
application for the same drug for the same disease or condition for that time period, except in limited circumstances. The applicable period is seven years in
the United States and ten years in the EU. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug
designation or if the drug is sufficiently profitable such that market exclusivity is no longer justified.
We may be unsuccessful in obtaining orphan drug designation for our product candidates. In addition, even if we obtain orphan drug exclusivity for a
product candidate, that exclusivity may not effectively protect the product candidate from competition because different therapies can be approved for the
same disease or condition. Even after an orphan drug is approved, the FDA or comparable foreign authorities can subsequently approve the same drug for
the same disease or condition if the FDA or comparable foreign authorities conclude that the later drug is clinically superior in that it is shown to be safer,
more effective or makes a major contribution to patient care. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved
for a use that is broader than the disease or condition for which it received orphan designation. Moreover, orphan drug exclusive marketing rights in the
United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure
sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. Orphan drug designation neither shortens the development
time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. While we may seek orphan drug
designation for applicable indications for our current and any future product candidates, we may never receive such designations. Even if we do receive
such designations, there is no guarantee that we will enjoy the benefits of those designations, including marketing exclusivity.
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any approved
products.
We face an inherent risk of product liability as a result of the clinical testing of product candidates and will face an even greater risk if we commercialize
any products. For example, we may be sued if any of our product candidates causes or is perceived to cause injury or is found to be otherwise unsuitable
during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in
design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state
consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to
limit commercialization of any approved products. Even successful defense would require significant financial and management resources.
Regardless of the merits or eventual outcome, liability claims may result in:
•
decreased demand for any approved product;
•
injury to our reputation;
•
withdrawal of clinical trial participants;
•
initiation of investigations by regulators;
•
costs to defend the related litigation;
•
a diversion of management’s time and our resources;
•
substantial monetary awards to trial participants or patients;
•
product recalls, withdrawals or labeling, marketing or promotional restrictions;
•
exhaustion of available insurance and our capital resources and potential increases in our insurance premiums and/or retention amounts; and
•
our inability, or limitations on our ability, to commercialize any product.
57
Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit
the commercialization of products we develop, alone or with collaboration partners.
Insurance coverage is increasingly expensive. We may not be able to maintain insurance at a reasonable cost or in an amount adequate to satisfy any
liability that may arise, if at all. Our insurance policy contains various exclusions, and we may be subject to a product liability claim for which we have no
coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by
our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Even if our agreements with any current or future
collaborator entitle us to indemnification against losses, such indemnification is limited and may not be available or adequate should any claim arise.
Healthcare legislative reform measures may significantly impact our business and results of operations.
In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the
Patient Protection and Affordable Care Act (the ACA) was passed, which substantially changed the way healthcare is financed by both government and
private insurers, and significantly impacts the U.S. pharmaceutical industry. The ACA, among other things, increased the minimum Medicaid rebates owed
by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care
organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs.
Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. In June 2021, the U.S. Supreme Court
dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In March 2021, the American Rescue Plan Act
of 2021 was signed into law, which eliminated the statutory cap on the Medicaid drug rebate beginning January 1, 2024. The rebate was previously capped
at 100% of a drug’s average manufacturer price.
Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. In August 2022, the Inflation Reduction
Act of 2022 (IRA) was signed into law. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare
(beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price
increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new manufacturer discounting program
(which began in 2025). The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions
through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are
implemented. In August 2024, HHS announced the negotiated prices for the initial ten drugs, which will first be effective in 2026, and in January 2025,
HHS announced the second set of drugs that will be subject to price negotiations. Because the Medicare drug price negotiation program is currently subject
to legal challenges, and for other reasons, it is currently unclear how the IRA will be effectuated, and the impact of the IRA on our business and the
pharmaceutical industry cannot yet be fully determined.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and
state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates, complementary
diagnostics or companion diagnostics, or impose additional pricing pressures.
Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.
Specifically, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things,
bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer
patient programs, and reform government program reimbursement methodologies for drugs.
In addition, FDA regulations and guidance may be revised or reinterpreted by the FDA in ways that may significantly affect our business. Any new
regulations or guidance, or revisions or reinterpretations of existing regulations or guidance, may impose additional costs or lengthen FDA review times for
our product candidates. We cannot determine how changes in regulations, statutes, policies or interpretations when and if issued, enacted or adopted may
affect our business in the future.
58
Disruptions at the FDA and other government agencies caused by funding shortages, staffing levels or global health concerns could hinder their ability
to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner
or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could
negatively impact our business.
The ability of the FDA and foreign regulatory agencies to review and approve new products can be affected by a variety of factors, including government
budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes.
Average review times at the FDA and foreign regulatory agencies have fluctuated in recent years as a result.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government
agencies, which would adversely affect our business. For example, in recent years, the U.S. government has shut down several times and certain regulatory
agencies, such as the FDA, have had to furlough critical employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the
FDA postponed most inspections of domestic and foreign manufacturing facilities at various points. More recently, there have been layoffs and
resignations at the FDA and other federal agencies. If a prolonged government shutdown occurs or the FDA or other agencies experiences other delays due
to staffing shortages or otherwise, it could significantly impact the ability of those agencies to timely review and process our regulatory submissions.
We are subject to stringent privacy laws, information security policies and contractual obligations governing the use, processing and transfer of
personal information.
The global data protection landscape is rapidly evolving, and we are or may become subject to numerous federal, state and foreign laws, requirements and
regulations governing the collection, use, disclosure, retention and security of personal information, such as information that we may collect in connection
with clinical trials in the United States and abroad. Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable
future, and we cannot yet determine the impact future laws, regulations, standards or perception of their requirements may have on our business. This
evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal
information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. The cost of
compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or perceived failure by us to comply with
federal, state or foreign laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could
result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation.
As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased
scrutiny or attention from regulatory authorities. In the United States, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes,
among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. We
may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and
security requirements under HIPAA. While we do not believe that we are currently acting as a covered entity or business associate under HIPAA and thus
are not directly regulated under HIPAA, any person may be prosecuted under HIPAA’s criminal provisions either directly or under aiding-and-abetting or
conspiracy principles. Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive
individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements
for disclosure of individually identifiable health information.
Further, various states have implemented certain data privacy and security laws and regulations that impose restrictive requirements regulating the use and
disclosure of health-related and other personal information. For example, the California Consumer Privacy Act, as amended by the California Privacy
Rights Act (collectively, the CCPA) requires certain businesses that process personal information of California residents to, among other things: provide
certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; receive and respond to
requests from California residents to access, delete and correct their personal information, or opt-out of certain disclosures of their personal information;
and enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf. Similar
laws have been passed in other states, and are continuing to be proposed at the state and the federal level, reflecting a trend toward more stringent privacy
legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In
the event that we are subject to or affected by HIPAA or the CCPA or other domestic privacy and data protection laws, any liability from failure to comply
with the requirements of these laws could adversely affect our financial condition.
State laws and regulations are not necessarily preempted by federal laws and regulations, such as HIPAA, particularly if a state affords greater protection to
individuals than federal law. Where state laws are more protective, we must comply with the stricter provisions.
59
In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their
personal information has been misused. The interplay of federal and state laws may be subject to varying interpretations by courts and government
agencies, creating complex compliance issues for us and data we receive, use and share, potentially exposing us to additional expense, adverse publicity
and liability. Legal requirements relating to the collection, storage, handling, and transfer of personal information and personal data continue to evolve and
may result in increased public scrutiny and escalating levels of enforcement, sanctions and increased costs of compliance.
The processing of personal data in the European Economic Area (EEA) is governed by the General Data Protection Regulation (the GDPR). The GDPR
imposes stringent requirements for controllers and processors of personal data. The GDPR applies extraterritorially, and we may be subject to the GDPR
because of our data processing activities that involve the personal data of individuals located in the EEA, or in the context of our activities within the EEA,
such as in connection with any EEA clinical trials. The GDPR may impose additional obligations and liability in relation to the personal data that we
process, and we may be required to put in place additional mechanisms to ensure compliance with its requirements. This may be onerous and may interrupt
or delay our development activities. If we or our vendors fail to comply with the GDPR and the applicable national data protection laws of the EEA
member states, or if regulators assert we have failed to comply with these laws, it may lead to regulatory enforcement actions, which can result in, among
other things, monetary penalties of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the noncompliant undertaking for the
preceding financial year, whichever is higher, and other administrative penalties. The GDPR also imposes strict rules on the transfer of personal data out of
the EEA to the United States and other third countries that have not been found to provide adequate protection to such personal data, and the efficacy and
longevity of current transfer mechanisms between the EEA and the United States remains uncertain. Case law from the Court of Justice of the European
Union states that reliance on the standard contractual clauses – a standard form of contract approved by the European Commission as an adequate personal
data transfer mechanism – alone may not necessarily be sufficient in all circumstances, and that transfers must be assessed on a case-by-case basis.
The European Commission adopted its Adequacy Decision in relation to the EU-U.S. Data Privacy Framework (the DPF) in July 2023, rendering the DPF
effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF. We currently rely in part on the EU standard contractual clauses and
the UK Addendum to the EU standard contractual clauses, as relevant, to transfer personal data outside the EEA and the UK, including to the United States.
We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue. In particular, we expect the DPF
Adequacy Decision to be challenged and international transfers to the U.S. and to other jurisdictions more generally to continue to be subject to enhanced
scrutiny by regulators. As a result, we may have to make certain operational changes, and we will have to implement revised standard contractual clauses
and other relevant documentation for existing data transfers within required timeframes.
We must also comply with the UK General Data Protection Regulation, which, together with the UK Data Protection Act 2018, retains the GDPR in UK
national law (collectively, the UK GDPR). The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of £17.5 million or 4% of global
turnover of a noncompliant undertaking’s global annual revenue for the preceding financial year. On October 12, 2023, the UK Extension to the DPF came
into effect (as approved by the UK Government), as a data transfer mechanism from the UK to U.S. entities self-certified under the DPF. We may incur
liabilities, expenses, costs and other operational losses under the GDPR and privacy laws of the applicable EU and EEA Member States and the UK in
connection with any measures we take to comply with them. As we continue to expand into other foreign countries and jurisdictions, we may also be
subject to additional laws and regulations that may affect how we conduct business.
Compliance with U.S. and international data protection laws and regulations could cause us to incur substantial costs or require us to change our business
practices and compliance procedures in a manner adverse to our business. Penalties for violations of these laws vary and may be significant. Moreover,
complying with these various laws could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose
data, or in some cases, impact our ability to operate in certain jurisdictions. In addition, we rely on third-party vendors to collect, process and store data on
our behalf and we cannot guarantee that such vendors are in compliance with all applicable data protection laws and regulations. Our or our vendors’
failure to comply with U.S. and international data protection laws and regulations could result in government investigations and enforcement actions
(which could include civil or criminal penalties), private litigation and adverse publicity. Claims that we have violated individuals’ privacy rights, failed to
comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time consuming to
defend and could result in adverse publicity.
Our business and operations, or those of our CROs or other third parties, may suffer in the event of information technology system failures,
cyberattacks or deficiencies in our cybersecurity, which could materially affect our business, results of operations and financial condition.
We receive, generate and store significant and increasing volumes of sensitive information, such as health-related information, clinical trial data,
proprietary business information and the personal information of our employees and contractors (collectively, Confidential
60
Information). We face a number of risks related to protecting the information technology systems we rely on and this Confidential Information, including
loss of access risk, inappropriate use or disclosure, inappropriate modification and the risk of our being unable to adequately monitor, audit and modify our
controls over our Confidential Information. This risk extends to the information technology systems and information of any collaboration partners, medical
institutions, clinical investigators, CROs, contract laboratories and other third parties involved in our business. There can be no assurance that our
cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or
effective in protecting our systems and Confidential Information.
Despite the implementation of security measures, our information technology systems, as well as those of CROs or other third parties with which we have
relationships, are vulnerable to attack, interruption and damage from computer viruses and malware (e.g., ransomware), malicious code, misconfigurations,
“bugs” or other vulnerabilities, unauthorized access, natural and manmade disasters, terrorism, war and telecommunication and electrical failures,
malfeasance by external or internal parties, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors and
human error (e.g., social engineering and phishing). Attacks upon information technology systems are increasing in their frequency, levels of persistence,
sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise.
Furthermore, because the technologies used to obtain unauthorized access to, or to sabotage or disrupt, systems change frequently and often are not
recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also
experience security breaches that may remain undetected for an extended period. We may not be able to anticipate all types of security threats, and, even if
identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are
designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. We may also face increased cybersecurity risks due to
our reliance on internet technology and the number of our and our service providers’ employees who are (and may continue to be) working remotely, which
may create additional opportunities for cybercriminals to exploit vulnerabilities. The White House, the Securities and Exchange Commission (the SEC) and
other regulators have also increased their focus on companies’ cybersecurity vulnerabilities and risks. Further, although we have implemented policies
regarding limited permitted use of generative artificial intelligence (AI) by our employees, Confidential Information could be leaked, disclosed or revealed
as a result of or in connection with our employees’ use of generative AI technologies.
We, our CROs and certain of our service providers are, from time to time, subject to cyberattacks and security incidents. While we have not to our
knowledge experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our or
our critical third parties’ operations, it could result in delays and/or material disruptions of our research and development programs, our operations and
ultimately, our financial results. For example, the loss of clinical trial data from completed, ongoing or planned clinical trials could result in delays in our
regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we rely on third parties for the manufacture of
our product candidates and to conduct clinical trials, and similar events relating to their information technology systems could also adversely impact our
business. Further, due to the current political uncertainty involving Russia and Ukraine, there is an increased likelihood that the tensions could result in
cyberattacks or cybersecurity incidents that could either directly or indirectly impact our or our critical third parties’ operations. To the extent that any
disruption or security breach were to result in a loss of or damage to data or applications, or inappropriate disclosure of Confidential Information, the costs
associated with the investigation, remediation and potential notification of the breach to counterparties and data subjects could be material, we could incur
liability due to delays in the development and commercialization of our product candidates or other business activities, and we may be exposed to
reputational harm, litigation, regulatory investigations and enforcement, fines and penalties, or increased costs of compliance and system remediation.
Our existing general liability and cyber liability insurance policies may not cover, or may cover only a portion of, any potential claims related to security
breaches to which we are exposed or may not be adequate to indemnify us for all or any portion of liabilities that may be imposed. We also cannot be
certain that our existing insurance coverage will continue to be available on acceptable terms or in amounts sufficient to cover the potentially significant
losses that may result from a security incident or breach or that the insurer will not deny coverage of any future claim. If the information technology
systems of our CROs or other service providers were to fail, or become subject to disruptions or security breaches, we may have insufficient recourse
against such third parties and we may have to expend significant resources to mitigate the impact of such an event, and to develop and implement
protections to prevent future events of this nature from occurring.
61
Risks related to reliance on third parties
We may depend on collaborations with other third parties for the development and commercialization of our product candidates in the future. If our
collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.
In the future, we may form or seek other strategic alliances, joint ventures or collaborations, or enter into additional licensing arrangements with third
parties that we believe will complement or augment our development and commercialization efforts with respect to our product candidates.
Collaborations involving our current and future product candidates may pose the following risks to us:
•
collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may have
incentives that are different than ours;
•
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial, abandon a product
candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
•
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or
product candidates;
•
collaborators with marketing, manufacturing or distribution rights to one or more products may not commit sufficient resources to or
otherwise not perform satisfactorily in carrying out these activities as it relates to our product candidates or products;
•
collaborators may not properly prosecute, maintain, enforce or defend our intellectual property rights or may use our proprietary information
in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary
information or expose us to potential litigation, or other intellectual property proceedings;
•
collaborators may own or co-own intellectual property covering products that result from our collaboration with them, and in such cases, we
may not have the exclusive right to develop, license or commercialize this intellectual property;
•
disputes may arise with respect to ownership of any intellectual property developed pursuant to our collaborations;
•
disputes may arise between a collaborator and us that cause the delay or termination of the research, development or commercialization of the
product candidate, or that result in costly litigation or arbitration that diverts management attention and resources; and
•
if a current or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product
development or commercialization program under our collaboration could be delayed, diminished or terminated, including if the partner in
such a business combination has products that compete with ours.
As a result, if we enter into additional collaboration agreements and strategic partnerships or license our intellectual property, products or businesses, we
may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our or their existing operations, which could
delay our timelines or otherwise adversely affect our business. We also cannot be certain that, following entry into a strategic transaction or license, we will
achieve the revenue or specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership agreements
related to our current or future product candidates could delay the development and commercialization of our product candidates, which would harm our
business prospects, financial condition, and results of operations.
We may seek to establish additional collaborations, and, if we are not able to establish them on commercially reasonable terms, we may have to alter
our development and commercialization plans.
The advancement of our product candidates and development programs and the potential commercialization of our current and future product candidates
will require substantial additional cash to fund expenses. For some of our programs, we may decide to collaborate with additional pharmaceutical and
biotechnology companies with respect to development and potential commercialization. Any of these relationships may require us to incur non-recurring
and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders, or disrupt our management and
business.
We face significant competition in seeking appropriate strategic partners, and the negotiation process is time-consuming and complex. Whether we reach a
definitive agreement for other collaborations will depend, among other things, upon our assessment of the
62
collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of
factors. Those factors may include the design or results of clinical trials, the progress of our clinical trials, the likelihood of approval by the FDA or similar
regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and
delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology,
which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The
collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether
such a collaboration could be more attractive than the one with us for our product candidate. Further, we may not be successful in our efforts to establish
one or more strategic partnerships or other alternative arrangements for future product candidates because they may be deemed to be at too early of a stage
of development for collaborative effort and third parties may not view them as having the requisite potential to demonstrate safety and efficacy.
The terms of any collaboration agreement we enter into may restrict us from entering into future agreements on certain terms with potential collaborators,
which may limit our ability to find additional collaborators in the future or adversely impact the terms of these future collaborations.
In addition, business combinations among pharmaceutical and biotechnology companies have in the past and may in the future result in a reduced number
of potential future collaborators.
We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the
development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other
development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and
undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or
commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do
not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.
If conflicts arise between us and our collaborators or strategic partners, these parties may act in a manner adverse to us and could limit our ability to
implement our strategies.
If conflicts arise between our corporate or academic collaborators or strategic partners and us, the other party may act in a manner adverse to us and could
limit our ability to implement our strategies. Amgen or future collaborators or strategic partners may develop, either alone or with others, products in
related fields that are competitive with the products or potential products that are the subject of these collaborations. Competing products, either developed
by the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of partner support for
our product candidates. Our current or future collaborators or strategic partners may preclude us from entering into collaborations with their competitors,
fail to obtain timely regulatory approvals, terminate their agreements with us prematurely, or fail to devote sufficient resources to the development and
commercialization of products. Any of these developments could harm our product development efforts.
We rely on third parties to conduct the clinical trials for our product candidates. If these third parties do not successfully carry out their contractual
duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialize our
product candidates.
We do not have the ability to independently conduct clinical trials. We and any collaboration partners who may conduct clinical trials involving our product
candidates rely on medical institutions, clinical investigators, CROs, contract laboratories, and other third parties to conduct or otherwise support these
clinical trials, all of which we refer to herein as our clinical trials. We and our collaborators rely heavily on these parties for execution of clinical trials and
control only certain aspects of their activities. In addition, we have limited control over the activities of our collaborators who may conduct clinical trials
involving our product candidates. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the
applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on third parties does not relieve us of these responsibilities.
For any violations of laws and regulations during the conduct of our clinical trials, we could be subject to untitled and warning letters or enforcement
actions that may include civil penalties or criminal prosecution.
We, our collaborators and the other third parties involved in our clinical trials are required to comply with regulations and requirements, including GCP, for
conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate, and
that the trial patients are adequately informed of the potential risks of participating in clinical trials and their rights are protected. These regulations are
enforced by the FDA, the competent authorities of the EU member states and comparable foreign regulatory authorities for any drugs in clinical
development. The FDA and comparable foreign regulatory authorities enforce GCP requirements through periodic inspections of clinical trial sponsors,
principal investigators
63
and trial sites. If we, our collaborators or other third parties fail to comply with applicable GCP, the clinical data generated in our clinical trials may be
deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our
marketing applications. Upon inspection, the FDA or comparable foreign authorities may determine that any of our current or future clinical trials do not
comply with GCP. In addition, our clinical trials must be conducted with product candidates produced under cGMP regulations and similar regulatory
requirements outside the United States. Our failure or the failure of third parties to comply with these regulations may require us to repeat clinical trials,
which would delay the marketing approval process and could also subject us to enforcement action. We also are required to register certain ongoing clinical
trials and provide certain information, including information relating to the trial’s protocol, on a United States government-sponsored database,
ClinicalTrials.gov, within specific timeframes. Similar disclosure requirements may exist in foreign jurisdictions. Failure to do so can result in fines,
adverse publicity and civil and criminal sanctions.
We have participated and in the future may participate in clinical collaborations where a partner is responsible for conducting a clinical trial involving our
product candidates. These collaborators may be commercial entities or investigator-sponsored or initiated studies that use our product candidates. Although
we intend to design the clinical trials for our product candidates, or be involved in the design when other parties sponsor the trials, because these
collaborators will have primary responsibility for the conduct of these trials, many important aspects of our clinical development for these trials, including
their conduct and timing, is outside of our direct control.
Our reliance on third parties to conduct future clinical trials will also result in less direct control over the management of data developed through clinical
trials than would be the case if we were relying entirely upon our own staff. Communicating with third parties can also be challenging, potentially leading
to mistakes as well as difficulties in coordinating activities. Third parties may:
•
have staffing difficulties;
•
fail to comply with contractual obligations;
•
experience regulatory compliance issues;
•
have incentives that are different than ours;
•
undergo changes in priorities or become financially distressed; or
•
form relationships with other entities, some of which may be our competitors.
These factors may materially adversely affect the willingness or ability of third parties to conduct our clinical trials and may subject us to unexpected cost
increases that are beyond our control. If the CROs or other third parties involved in our clinical trials do not perform these trials in a satisfactory manner,
breach their obligations to us, or fail to comply with regulatory requirements, the development, marketing approval and commercialization of our product
candidates may be delayed, we may not be able to obtain marketing approval and commercialize our product candidates, or our development program may
be materially and irreversibly harmed. If we are unable to rely on clinical data collected by third parties involved in our clinical trials, we could be required
to repeat, extend the duration of, or increase the size of our clinical trials and this could significantly delay commercialization and require significantly
greater expenditures.
If any of our relationships with our CROs or other third parties involved in our clinical trials terminate, we may not be able to enter into arrangements with
alternative CROs or other third parties on commercially reasonable terms, or at all. If CROs or other third parties do not successfully carry out their
contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain are
compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any clinical trials such CROs or other third
parties are associated with may be extended, delayed or terminated, and we may not be able to obtain marketing approval for or successfully commercialize
our product candidates.
We rely on third parties to manufacture preclinical and clinical drug supplies, and we intend to rely on third parties to produce commercial supplies of
any approved product, which increases the risk that we will not have sufficient quantities of these product candidates or products or such quantities at
an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
We do not own or operate manufacturing facilities for the production of preclinical, clinical or commercial supplies of the product candidates that we are
developing or evaluating in our development programs. We have limited personnel with experience in drug manufacturing and lack the resources and the
capabilities to manufacture any of our product candidates on a preclinical, clinical or commercial scale. We rely on third parties for supply of our
preclinical and clinical drug supplies (including key starting and intermediate materials), and our strategy is to outsource all manufacturing of our product
candidates and products to third parties.
64
In order to conduct clinical trials of product candidates, we will need to have them manufactured in potentially large quantities. Our third-party
manufacturers may be unable to successfully increase the manufacturing capacity for any of our clinical drug supplies (including key starting and
intermediate materials) in a timely or cost-effective manner, or at all. In addition, quality issues may arise during scale-up activities and at any other time.
For example, ongoing data on the stability of our product candidates may shorten the expiry of our product candidates and lead to clinical trial material
supply shortages, and potentially clinical trial delays. If these third-party manufacturers are unable to successfully scale up the manufacture of our product
candidates in sufficient quality and quantity, the development, testing and clinical trials of that product candidate may be delayed or infeasible, and
regulatory approval or commercial launch of that product candidate may be delayed or not obtained.
Some of our third-party suppliers are currently our sole source of drug supplies (including key starting and intermediate materials) and, as a result, an issue
with one of these suppliers may impact our development or commercial plans. Our use of new third-party manufacturers or suppliers increases the risk of
delays in production or insufficient supplies of our product candidates (and the key starting and intermediate materials for such product candidates) as we
transfer our manufacturing technology to these manufacturers or suppliers and as they gain experience manufacturing or producing our product candidates
(and the key starting and intermediate materials for these product candidates).
Even after a third-party manufacturer has gained significant experience in manufacturing our product candidates (or the key starting and intermediate
materials for such product candidates), or even if we believe we have succeeded in optimizing the manufacturing process, there can be no assurance that
such manufacturer will produce sufficient quantities of our product candidates (or the key starting and intermediate materials for such product candidates)
in a timely manner or continuously over time, or at all. We may be delayed if we need to change the manufacturing process used by a third party. Further, if
we change an approved manufacturing process, then we may be delayed if the FDA or a comparable foreign authority needs to review the new
manufacturing process before it may be used.
Reliance on third-party manufacturers for preclinical, clinical and commercial supplies entails risks, including:
•
reliance on the third party for regulatory compliance and quality assurance;
•
the possible breach of the manufacturing agreement by the third party;
•
the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
•
the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us
We do not currently have any agreements with third-party manufacturers for long-term commercial supply. In the future, we may be unable to enter into
agreements with third-party manufacturers for commercial supplies of any of our product candidates, or may be unable to do so on acceptable terms. Even
if we are able to establish and maintain arrangements with third-party manufacturers for commercial supply, reliance on third-party manufacturers entails
risks, including those described above.
Third-party manufacturers may not be able to comply with cGMP requirements or similar regulatory requirements outside the United States. Our failure, or
the failure of our third-party manufacturers, to comply with applicable requirements could result in sanctions being imposed on us, including fines,
injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products,
operating restrictions and/or criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.
Our future product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing
facilities. There are a limited number of manufacturers that operate under cGMP requirements particularly for the development of monoclonal antibodies,
and that might be capable of manufacturing for us.
Additionally, in January 2024, there was Congressional activity, including the introduction of the BIOSECURE Act in the House of Representatives and a
substantially similar Senate bill. In September 2024, the House of Representatives of the prior Congress (the 118th Congress) passed the BIOSECURE Act,
but the Senate never voted on it. It is unclear whether the current Congress (the 119th Congress) will introduce the BIOSECURE Act or similar legislation
in this congressional session and, if so, how the scope, prohibitions or designated biotechnology companies of concern may differ from the version of the
BIOSECURE Act passed by the House in the prior 118th Congress. If these bills became law, or similar laws are passed, they would have the potential to
severely restrict the ability of U.S. biopharmaceutical companies like us to purchase services or products from, or otherwise collaborate with, certain
Chinese biotechnology companies “of concern” without losing the ability to contract with, or otherwise receive funding from, the U.S. government. We do
business with companies in China, including some named in these bills, and it is possible some of our contractual counterparties could be impacted by the
legislation described above.
65
If the third parties that we engage to supply any materials or manufacture product for our preclinical tests and clinical trials should cease to continue to do
so for any reason, we likely would experience delays in advancing these tests and trials while we identify and qualify replacement suppliers or
manufacturers, and we may be unable to obtain replacement supplies on terms that are favorable to us or at all. In addition, if we are not able to obtain
adequate supplies of our product candidates or the substances used to manufacture them, it will be more difficult for us to develop our product candidates
and compete effectively.
Our current and anticipated future dependence upon others for the manufacture of our product candidates (or the key starting and intermediate materials for
such product candidates) may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that
receive marketing approval on a timely and competitive basis.
Our future relationships with customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable
anti-kickback, fraud and abuse, false claims, transparency, and other healthcare laws and regulations, which could expose us to criminal sanctions,
civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription
of any product candidates for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to
broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the
federal False Claims Act (FCA), which may constrain the business or financial arrangements and relationships through which we sell, market and distribute
any products for which we obtain marketing approval. The applicable federal, state and foreign healthcare laws and regulations that may affect our ability
to operate include:
•
the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any
remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return
for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which
payment may be made, in whole or in part, under the Medicare and Medicaid programs or other federal healthcare programs. A person or
entity can be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it. The Anti-Kickback
Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and
formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities
from prosecution;
•
the federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which prohibit any person or entity
from, among other things, knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval
by, the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or
fraudulent claim to the federal government. In addition, the government may assert that a claim including items or services resulting from a
violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA;
•
HIPAA, which created federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to
defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money
or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and
knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements
in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the federal
Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statutes or specific intent
to violate them;
•
the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires manufacturers of drugs,
devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance
Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians
(defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (defined to include
physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse
midwives), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;
•
federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm
consumers; and
66
•
analogous or related foreign, state or local laws and regulations, including anti-kickback and false claims laws, which may apply to sales or
marketing arrangements and claims involving healthcare items or services reimbursed by non-government third-party payors, including
private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance
guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to
healthcare providers; and state laws that require drug manufacturers to report information related to payments and other transfers of value to
physicians and other healthcare providers or marketing expenditures.
Because of the breadth of the laws described above and the narrowness of the statutory exceptions and regulatory safe harbors available under them, it is
possible that some of our business activities could be subject to challenge under one or more of these laws.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in
light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between
healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare
industry. Ensuring that our business arrangements with third parties comply with applicable healthcare laws, as well as responding to investigations by
government authorities, can be time- and resource-consuming and can divert management’s attention from the business.
If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to
penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from
participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional
reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance
with these laws, any of which could harm our ability to operate our business and our financial results. Further, if the physicians or other providers or
entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal, civil or
administrative sanctions, including exclusions from government funded healthcare programs. In addition, the approval and commercialization of any of our
product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign
laws.
Risks related to intellectual property
If we and our collaborators are unable to obtain and maintain sufficient patent and other intellectual property protection for our product candidates
and technology, our competitors could develop and commercialize products and technology similar or identical to ours, and we may not be able to
compete effectively in our market or successfully commercialize any of our current or future product candidates.
Our success depends in significant part on our ability and the ability of our collaborators to obtain, maintain, enforce and defend patents and other
intellectual property rights with respect to our product candidates and technology and to operate our business without infringing, misappropriating, or
otherwise violating the intellectual property rights of others. If we and our collaborators are unable to obtain and maintain sufficient intellectual property
protection for our product candidates or the product candidates that we may identify, or if the scope of the intellectual property protection obtained is not
sufficiently broad, our competitors and other third parties could develop and commercialize product candidates similar or identical to ours, and our ability
(and the ability of our collaborators) to successfully commercialize our product candidates may be impaired. Our patent coverage with respect to our
clinical and preclinical programs is limited, and we can provide no assurance that any of our current or future patent applications will result in issued
patents or that any issued patents will provide us with any competitive advantage. Failure to obtain such issued patents could negatively impact our and our
collaborators’ ability to develop or commercialize any of our product candidates or technology.
We seek to protect our proprietary positions by, among other things, filing patent applications in the United States and abroad related to our current product
candidates and the product candidates that we may identify. Obtaining, maintaining, defending and enforcing pharmaceutical patents is costly, time
consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any
patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that we have failed or will fail to identify
patentable aspects of our research and development output before it is too late to obtain patent protection. We may not have the right to control the
preparation, filing, prosecution and maintenance of patent applications, or to maintain the rights to patents licensed to or from third parties.
Although we enter into confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development
output, such as our employees, collaborators, CROs, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach
the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. Further, we may not
be aware of all third-party intellectual property rights
67
potentially relating to our product candidates. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent
applications in the United States and other jurisdictions are typically not published until approximately 18 months after filing or, in some cases, not at all.
Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or that
we were the first to file for patent protection of such inventions.
The patent position of pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual questions and has, in
recent years, been the subject of much debate and litigation throughout the world. In addition, the laws of foreign countries may not protect our rights to the
same extent as the laws of the United States, or vice versa. As a result, the issuance, scope, validity, enforceability and commercial value of our patent
rights are highly uncertain. The subject matter claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be
reinterpreted after issuance. Therefore, our pending and future patent applications may not result in patents being issued in relevant jurisdictions that
protect our product candidates, in whole or in part, or which effectively prevent others from commercializing competitive product candidates, and, even if
our patent applications issue as patents in relevant jurisdictions, they may not issue in a form that will provide us with any meaningful protection for our
product candidates or technology, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Additionally, our
competitors may be able to circumvent our patents by developing similar or alternative product candidates or technologies in a non-infringing manner.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent
offices in the United States and abroad. We may be subject to a third-party pre-issuance submission of prior art to the United States Patent and Trademark
Office (the USPTO) or become involved in opposition, derivation, revocation, reexamination, inter partes review, post-grant review or interference
proceedings challenging our patent rights or the patent rights of others, or other proceedings in the USPTO or applicable foreign offices that challenge
priority of invention or other features of patentability. An adverse determination in any such submission, proceeding or litigation could result in loss of
exclusivity or freedom to operate, patent claims being narrowed, invalidated or held unenforceable, in whole or in part, or limits on the scope or duration of
the patent protection of our product candidates, all of which could limit our ability to stop others from using or commercializing similar or identical product
candidates or technology to compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without
infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications were threatened,
regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product
candidates, or could negatively impact our ability to raise funds necessary to continue our research programs or clinical trials. Such proceedings could also
result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us.
In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such
candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient
rights to exclude others from commercializing products or technology similar or identical to ours for a meaningful amount of time, or at all. Moreover,
some of our owned or licensed patents and patent applications are, and may in the future be, co-owned with third parties. If we are unable to obtain
exclusive licenses to any such co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third
parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any
such co-owners in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could harm our
competitive position, business, financial condition, results of operations and prospects.
We have entered into license agreements with third parties. If we or a third party fail to comply with the obligations in the agreements under which we
license intellectual property rights to or from third parties, or these agreements are terminated, or we otherwise experience disruptions to business
relationships with our licensors or licensees, our competitive position, business, financial condition, results of operations and prospects could be
harmed.
In addition to patent and other intellectual property rights we own or co-own, we have licensed, and may in the future license, patent and other intellectual
property rights to and from other parties. Licenses may not provide us with exclusive rights to use the applicable intellectual property and technology in all
relevant fields of use and in all territories in which we may wish to develop or commercialize our products and technology in the future. As a result, we
may not be able to prevent competitors from developing and commercializing competitive products or technologies.
In addition, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications or to maintain,
defend and enforce the patents that we license to or from third parties, and we may have to rely on our partners to fulfill these responsibilities.
68
If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties, the licensor may have the
right to terminate the license. If these agreements are terminated, the underlying patents fail to provide the intended exclusivity or we otherwise experience
disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business or be prevented
from developing and commercializing our product candidates, and competitors could have the freedom to seek regulatory approval of, and to market,
products identical to ours. Termination of these agreements or reduction or elimination of our rights under these agreements may also result in our having
to negotiate new agreements with less favorable terms, cause us to lose our rights under these agreements, including our rights to important intellectual
property or technology, or impede, delay or prohibit the further development or commercialization of one or more product candidates that rely on such
agreements. It is possible that we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may
be required to expend significant time and resources to redesign our product candidates or the methods for manufacturing them or to develop or license
replacement technology, all of which may not be feasible on a technical or commercial basis.
In addition, if any of the research resulting in certain of our owned and/or in-licensed patent rights and technology were funded in part by the U.S. federal
or state governments, the government would have certain rights, including march-in rights, to such patent rights and technology. When new technologies
are developed with government funding, the government generally obtains certain rights in any resulting patents, including a non-exclusive license
authorizing the government to use the invention for noncommercial purposes. These rights may permit the government to disclose our confidential
information to third parties or allow third parties to use our licensed technology. The government can exercise its march-in rights if it determines that action
is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety
needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain
requirements to manufacture products embodying such inventions in the United States. Any of the foregoing could harm our competitive position, business,
financial condition, results of operations and prospects.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues and certain provisions
in intellectual property license agreements may be susceptible to multiple interpretations. Disputes may arise between us and our licensing partners
regarding intellectual property subject to a license agreement, including:
•
the scope of rights granted under the license agreement and other interpretation-related issues;
•
whether and the extent to which technology and processes of one party infringe on intellectual property of the other party that are not subject
to the license agreement;
•
rights to sublicense patent and other rights to third parties;
•
rights to transfer or assign the license;
•
any diligence obligations with respect to the use of the licensed technology in relation to development and commercialization of our product
candidates, and what activities satisfy those diligence obligations;
•
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property; and
•
the effects of termination.
The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant
intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could
harm our business, financial condition, results of operations and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or
impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the
affected product candidates.
In addition, if our licensors or licensees failed to abide by the terms of the license or failed to prevent infringement by third parties or if the licensed patents
or other rights were found to be invalid or unenforceable, our business, competitive position, financial condition, results of operations and prospects could
be materially harmed.
If we are unable to obtain licenses from third parties on commercially reasonable terms or at all, our business could be harmed.
It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our products, in which case we would be required
to obtain a license from these third parties. The licensing of third-party intellectual property rights is a competitive area, and more established companies
may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. More established companies
may have a competitive advantage over us due to their size, capital resources and greater development and commercialization capabilities. In addition,
companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party
intellectual
69
property rights on terms that would allow us to make an appropriate return on our investment or at all. If we are unable to obtain a necessary license, we
may be unable to develop or commercialize the affected product candidates, and the third parties owning such intellectual property rights could seek either
an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation. Even if we are
able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. If we are unable to license
needed technology, or if we are forced to license this technology on unfavorable terms, our business could be materially harmed.
We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might
subject us to infringement claims or adversely affect our ability to develop and market our product candidates.
We cannot guarantee that any of our or our licensors’ patent searches or analyses, including the identification of relevant patents, the scope of patent claims
or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending
patent application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction.
For example, U.S. patent applications filed before November 29, 2000 and certain U.S. patent applications filed after that date that will not be filed outside
the United States remain confidential until patents issue. Patent applications in the United States and elsewhere are published approximately 18 months
after the earliest filing for which priority is claimed, with the earliest filing date being commonly referred to as the priority date. Therefore, patent
applications covering our product candidates could have been filed by third parties without our knowledge. Additionally, pending patent applications that
have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our product
candidates. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history.
Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market
our product candidates. We may incorrectly determine that our product candidates are not covered by a third-party patent or may incorrectly predict
whether a third party’s pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United
States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates. Our
failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our product candidates.
If we fail to identify and correctly interpret relevant patents, we may be subject to infringement claims. We cannot guarantee that we will be able to
successfully settle or otherwise resolve any infringement claims. If we fail in any of these disputes, in addition to being forced to pay damages, which may
be significant, we may be temporarily or permanently prohibited from commercializing any of our product candidates that are held to be infringing. We
might, if possible, also be forced to redesign product candidates so that we no longer infringe the third-party intellectual property rights. Any of these
events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to
devote to our business.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its
earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if
patents covering our current and future product candidates are obtained, once the patent life has expired for a product candidate, we may be open to
competition from competitive medications, including generic medications and biosimilars. Given the amount of time required for the development, testing
and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates
are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing
product candidates similar or identical to ours for a meaningful amount of time, or at all.
70
Depending upon the timing, duration and conditions of any FDA marketing approval of our product candidates, one or more of our owned or licensed U.S.
patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the
Hatch-Waxman Amendments, and similar legislation in the European Union and certain other countries. The Hatch-Waxman Amendments permit a patent
term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and
the FDA regulatory review process. However, we may not receive an extension if we fail to exercise due diligence during the testing phase or regulatory
review process, fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable
requirements. Moreover, the length of the extension could be less than we request. Only one patent per approved product can be extended, the extension
cannot extend the total patent term beyond 14 years from approval and only those claims covering the approved drug, a method for using it or a method for
manufacturing it may be extended. If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period
during which we can enforce our patent rights for the applicable product candidate will be shortened and our competitors may obtain approval to market
competing products sooner. As a result, our revenue from applicable products could be reduced. Further, if this occurs, our competitors may take advantage
of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the
case.
In addition, there are detailed rules and requirements regarding the patents that may be submitted to the FDA for listing in the Approved Drug Products
with Therapeutic Equivalence Evaluations (the Orange Book). We may be unable to obtain patents covering our product candidates that contain one or
more claims that satisfy the requirements for listing in the Orange Book. Even if we submit a patent for listing in the Orange Book, the FDA may decline to
list the patent, or a manufacturer of generic drugs may challenge the listing. If one of our product candidates is approved and a patent covering that product
candidate is not listed in the Orange Book, a manufacturer of generic drugs would not have to provide advance notice to us of any abbreviated NDA filed
with the FDA to obtain permission to sell a generic version of such product candidate.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting, maintaining, defending and enforcing patents on our product candidates in all countries throughout the world would be prohibitively
expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition,
the laws and enforcement practices of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the
United States. The current conflict between Russia and Ukraine may also make it difficult or impossible to continue to prosecute patent applications or
maintain patents in those countries or other affected territories. For example, in March 2022, a decree was adopted by the Russian government allowing
Russian companies and individuals to exploit inventions owned by patentees from the United States without consent or compensation. Consequently, we
may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made
using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained
patent protection to develop their own products and may export otherwise infringing products to territories where we have patent protection, but
enforcement rights are not as strong as those in the United States. These products may compete with our product candidates and our patents or other
intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems
of some countries do not favor the enforcement or protection of patents, trade secrets and other intellectual property, which could make it difficult for us to
stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. We may
need to share our trade secrets and proprietary know-how with current or future partners, collaborators, contractors and others located in countries at
heightened risk of theft of trade secrets, including through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by
state actors. Proceedings to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and
attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of
not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other
remedies awarded, if any, may not be commercially meaningful.
Many foreign countries, including some European Union countries, India, Japan and China, have compulsory licensing laws under which a patent owner
may be compelled under specified circumstances to grant licenses to third parties. In addition, many countries limit the enforceability of patents against
government agencies or government contractors. In those countries, we may have limited remedies if patents are infringed or if we (or one of our
collaborators) are compelled to grant a license (or sublicense) to a third party, which could materially diminish the value of the applicable patents. This
could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to
obtain a significant commercial advantage from the intellectual property that we develop or license.
71
Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
Obtaining and enforcing patents in the pharmaceutical industry is inherently uncertain, due in part to ongoing changes in the patent laws. For example, in
the United States, depending on decisions by Congress, the federal courts and the USPTO, the laws and regulations governing patents, and interpretation
thereof, could change in ways that could weaken our and our licensors’ or collaborators’ ability to obtain new patents or to enforce existing or future
patents, or that affect the term of our or our licensors’ or collaborators’ patents. For example, the U.S. Supreme Court has ruled on several patent cases in
recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain
situations. Therefore, there is increased uncertainty with regard to our and our licensors’ or collaborators’ ability to obtain patents in the future, as well as
uncertainty with respect to the value of patents once obtained.
Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our and our licensors’ or collaborators’ patent
applications and the enforcement or defense of our or our licensors’ or collaborators’ issued patents. For example, assuming that other requirements for
patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United
States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act (the Leahy-Smith Act)
enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are
met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the
claimed invention. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications are prosecuted and may also
affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to
challenge the validity of a patent by USPTO-administered post-grant proceedings, including post-grant review, inter partes review and derivation
proceedings. The USPTO has developed regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes
to patent law associated with the Leahy-Smith Act, particularly the first inventor-to-file provisions. Accordingly, it is not clear what, if any, impact the
Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and
costs surrounding the prosecution of our or our licensors’ patent applications and the enforcement or defense of our or our licensors’ issued patents.
Similarly, statutory or judicial changes to the patent laws of other countries may increase the uncertainties and costs surrounding the prosecution of patent
applications and the enforcement or defense of issued patents.
On June 1, 2023, the European Patent Package (the EU Patent Package) regulations were implemented with the goal of providing a single pan-European
Unitary Patent and a new European Unified Patent Court (the UPC), for litigation involving European patents. Under the UPC, all European patents,
including those issued prior to ratification of the European Patent Package, will by default automatically fall under the jurisdiction of the UPC. The UPC
provides our competitors with a new forum to centrally revoke our European patents, and allows for the possibility of a competitor to obtain pan-European
injunctions. It will be several years before we will understand the scope of patent rights that will be recognized and the strength of patent remedies provided
by the UPC. As the UPC is a relatively new court system, there is limited precedent for the court, increasing the uncertainty of any litigation. We will have
the right to opt our patents out of the UPC over the first seven years of the court’s existence, but doing so may preclude us from realizing the benefits, if
any, of the new unified court.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated if we fail to comply with these
requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other fees are required to be paid to the USPTO and foreign patent agencies in several
stages over the lifetime of a patent. In certain circumstances, we rely on our licensors and collaborators to pay these fees. The USPTO and various foreign
patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar requirements during the patent
application and prosecution process. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to
respond to official communications within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. While
an inadvertent lapse can in some cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in
which non-compliance can result in irrevocable abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent
rights in the relevant jurisdiction. If we or our licensors or collaborators fail to maintain the patents and patent applications covering our product candidates,
our competitors might be able to enter the relevant market(s) with similar or identical products or technology, which would harm our business, financial
condition, results of operations and prospects.
72
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and
unsuccessful, and issued patents covering our technology and product candidates could be found invalid or unenforceable if challenged.
Competitors and other third parties may infringe or otherwise violate our issued patents or other intellectual property or the patents or other intellectual
property of our licensors. In addition, our patents or the patents of our licensors may become involved in inventorship or priority disputes. Our pending
patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such
applications. To counter infringement or other unauthorized use, we may be required to file infringement claims, which can be expensive and time-
consuming. Our ability to enforce patent rights also depends on our ability to detect infringement. It may be difficult to detect infringers who do not
advertise the components or methods that are used in connection with their products and services. Moreover, it may be difficult or impossible to obtain
evidence of infringement in a competitor’s or potential competitor’s product or service. Any claims we assert against perceived infringers could provoke
these parties to assert counterclaims against us alleging that we infringe their patents or that our patents are invalid or unenforceable. In a patent
infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or
refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology. An adverse result in any
litigation proceeding could put one or more of our owned or licensed patents at risk of being invalidated, held unenforceable or interpreted narrowly.
Additionally, we may determine it is impractical or undesirable to enforce our intellectual property against some third parties.
If we were to initiate legal proceedings against a third party to enforce a patent directed to our product candidates, or one of our future product candidates,
the defendant could counterclaim that our patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging
invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements,
including lack of novelty, obviousness, non-enablement or insufficient written description. Grounds for an unenforceability assertion could be an allegation
that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution.
Third parties may also raise similar claims before the USPTO or an equivalent foreign body, even outside the context of litigation. Potential proceedings
include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings and equivalent proceedings in foreign
jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of, or amendment to our patents in such a way
that they no longer cover our technology or any product candidates that we may develop. The outcome following legal assertions of invalidity and
unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art of which we
and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would
lose at least part, and perhaps all, of the patent protection on the applicable product candidates or technology covered by the patent rendered invalid or
unenforceable.
Interference proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions
with respect to our patents or patent applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license
rights to it from the prevailing party. Our business could be materially harmed if the prevailing party does not offer us a license on commercially reasonable
terms or at all.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our
confidential information could be compromised by disclosure during this type of litigation.
Some of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of
complex patent litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed
intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon, misappropriating or
otherwise violating our intellectual property. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims could
result in substantial costs and diversion of management attention and other resources, which could harm our business. In addition, the uncertainties
associated with litigation could compromise our ability to raise the funds necessary to continue our clinical trials, continue our internal research programs,
or in-license needed technology or other product candidates. There could also be public announcements of the results of the hearing, motions, or other
interim proceedings or developments. If securities analysts or investors perceive those results to be negative, it could cause the price of shares of our
common stock to decline.
73
Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights,
the outcome of which would be uncertain and could negatively impact the success of our business.
Our commercial success depends upon our ability to develop, manufacture, market and sell our product candidates and use our proprietary technologies
without infringing, misappropriating or otherwise violating the intellectual property and other proprietary rights of third parties. There is considerable
intellectual property litigation in the pharmaceutical industry.
We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our product
candidates and their manufacture and our other technology, including re-examination, interference, post-grant review, inter partes review or derivation
proceedings before the USPTO or an equivalent foreign body. Numerous U.S. and foreign issued patents and pending patent applications owned by third
parties exist in the fields in which we are developing our product candidates. Third parties may assert infringement claims against us based on existing
patents or patents that may be granted in the future, regardless of their merit.
Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of
infringement, validity, enforceability or priority. A court of competent jurisdiction could hold that third-party patents asserted against us are valid,
enforceable and infringed, which could materially and adversely affect our ability to commercialize any of our product candidates and any other product
candidates or technologies covered by the asserted third-party patents. In order to successfully challenge the validity of a U.S. patent in federal court, we
would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of
a U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to
infringe, misappropriate or otherwise violate a third party’s intellectual property rights, and we are unsuccessful in demonstrating that these rights are
invalid or unenforceable, we could be required to obtain a license from such a third party in order to continue developing and marketing our products and
technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a
license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court
order, to cease commercializing the infringing technology or product. A finding of infringement could prevent us from commercializing our product
candidates or force us to cease some of our business operations. In the event of a successful claim of infringement against us, we may have to pay
substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties and other fees, redesign our infringing product
candidate or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Claims that we
have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
We may be subject to claims by third parties asserting that we or our employees have infringed upon, misappropriated or otherwise violated their
intellectual property rights, or claiming ownership of what we regard as our own intellectual property.
Many of our employees were previously employed at other biotechnology or pharmaceutical companies, and our consultants and advisors may work for
other biotechnology or pharmaceutical companies in addition to us. Although we try to ensure that our employees, consultants and advisors do not use the
proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed
intellectual property, including trade secrets or other proprietary information, of any of these individuals’ former or concurrent employers or clients. We
may also be subject to claims that patents and applications we have filed to protect inventions of our employees, consultants and advisors, even those
related to one or more of our product candidates, are rightfully owned by their former or concurrent employer. Litigation may be necessary to defend
against these claims.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or
personnel. Even if we are successful in prosecuting or defending against these claims, litigation could result in substantial costs, delay development of our
product candidates and be a distraction to management.
We may be subject to claims challenging the inventorship of our patents and other intellectual property.
We or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest in our owned or in-licensed
patents, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we or our licensors may have inventorship disputes that
arise from conflicting obligations of employees, consultants or others who are involved in developing our product candidates. While it is our policy to
require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning this intellectual
property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our
own. Our and their assignment agreements may not be self-executing or may be breached, and litigation may be necessary to defend against these and other
claims challenging inventorship or our or our licensors’ ownership of our owned or in-licensed patents, trade secrets or other intellectual property. If we
74
or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as
exclusive ownership of, or right to use, intellectual property that is important to our product candidates. Even if we are successful in defending against such
claims, litigation could result in substantial costs and be a distraction to management and other employees.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
We rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology and other proprietary information (including
unpatented know-how associated with Warp Drive Bio, Inc.) and to maintain our competitive position. Trade secrets and know-how can be difficult to
protect. We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with
parties who have access to them, such as our employees, collaborators, CROs, contract manufacturers, consultants, advisors and other third parties. We also
enter into confidentiality and invention or patent assignment agreements with our employees and consultants. We cannot guarantee that we have entered
into these agreements with each party that may have or has had access to our trade secrets or proprietary technology and processes. Despite our efforts, any
of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate
remedies for such breaches. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary.
Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary information will
be effective.
We also seek to preserve the integrity and confidentiality of our confidential proprietary information by maintaining physical security of our premises and
physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. Enforcing a claim
that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition,
some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully
obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or
information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor or other third party, our
competitive position would be materially and adversely harmed.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest, and our
business may be adversely affected.
Our registered and unregistered trademarks and trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing
on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential
collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our
ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims
brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long
term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our
business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors or licensees. Although these
license agreements may provide conditions and guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of
our trademarks and tradenames by these third parties may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual
property may be ineffective and could result in substantial costs and diversion of resources.
Intellectual property rights do not necessarily address all potential threats.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not
adequately protect our business or permit us to maintain our competitive advantage. For example:
•
others may be able to make products that are similar to our current or future product candidates or utilize similar technology but that are not
covered by the claims of our patents or the patents that we license or may own in the future;
•
we, or our current or future collaborators might not have been the first to make the inventions covered by an issued patent or pending patent
application that we license or may own in the future;
•
we or our current or future collaborators might not have been the first to file patent applications covering certain of our or their inventions;
•
others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or
licensed intellectual property rights;
75
•
generative AI technologies are a relatively novel development with evolving regulatory regimes that may not offer intellectual property
protections;
•
our pending owned or licensed patent applications or those that we may own or license in the future may not lead to issued patents;
•
issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors;
•
our competitors might conduct research and development activities in countries where we do not have patent rights and then use the
information learned from such activities to develop competitive products for sale in our major commercial markets;
•
we may not develop additional proprietary technologies that are patentable;
•
the patents of others may harm our business; and
•
we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent
covering such intellectual property.
Risks related to employee matters and managing our growth
We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may
not be able to successfully implement our business strategy.
We are highly dependent on members of our executive team. The loss of the services of any of them may adversely impact the achievement of our
objectives. Any of our executive officers could leave our employment at any time, as all of our employees are “at-will” employees. We currently do not
have “key person” insurance on any of our employees. The loss of the services of one or more of our key personnel might impede the achievement of our
research, development and commercialization objectives.
Recruiting and retaining qualified employees, consultants and advisors for our business, including scientific and technical personnel, is critical to our
success. Competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable
terms given the competition among numerous pharmaceutical and biotechnology companies and academic institutions for skilled individuals. In addition,
failure to succeed in preclinical studies, clinical trials or applications for marketing approval may make it more challenging to recruit and retain qualified
personnel. The inability to recruit, or the loss of services of certain executives, key employees, consultants or advisors may impede the progress of our
research, development and commercialization objectives.
We will need to increase the size of our organization, and we may experience difficulties in managing this growth.
As of December 31, 2024, we had 534 full-time employees, including 423 employees engaged in research and development. As our development and
commercialization plans and strategies develop, and as we operate as a public company, we expect to need additional managerial, research and
development, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of
management, including:
•
identifying, recruiting, integrating, retaining and motivating additional employees;
•
managing our internal development efforts effectively, including the clinical and FDA review process for our product candidates, while
complying with our contractual obligations to contractors and other third parties; and
•
improving our operational, financial and management controls, reporting systems and procedures.
Our future financial performance and our ability to advance development of and, if approved, commercialize our product candidates will depend, in part, on
our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-
to-day activities in order to devote a substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to
provide certain services, including substantially all aspects of marketing approval, clinical management and manufacturing. The services of these
independent organizations, advisors and consultants may not continue to be available to us on a timely basis when needed, on economically reasonable
terms, or at all, and we may be unable to find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the
quality or accuracy of the services provided by
76
consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval
of any current or future product candidates or otherwise advance our business.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be
able to successfully implement the tasks necessary to further develop and commercialize any of our product candidates and, accordingly, may not achieve
our research, development and commercialization goals.
We currently have a limited commercial organization. If we are unable to establish sufficient sales and marketing capabilities on our own or through
third parties, we may not be able to market and sell any products effectively, if approved, or generate product revenue.
We currently have a limited commercial organization. In order to commercialize any product, if approved, in the United States and foreign jurisdictions, we
must build our marketing, sales, distribution, market access, analytics, managerial and other non-technical capabilities or make arrangements with third
parties to perform these services, and we may not be successful in doing so. In advance of any of our product candidates receiving regulatory approval, we
expect to establish a sales organization with technical expertise as well as supporting distribution capabilities to commercialize each such product
candidate, which will be expensive and time-consuming. We have no prior experience in the marketing, sale and distribution of pharmaceutical products,
and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain, and incentivize qualified
individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed
sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the
commercialization of these products. We may choose to collaborate with third parties that have direct sales forces and established distribution systems,
either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. If we are unable to enter into such
arrangements on acceptable terms or at all, we may not be able to successfully commercialize our product candidates.
We have in the past engaged and may in the future engage in strategic transactions; these transactions could affect our liquidity, dilute our existing
stockholders, increase our expenses and present significant challenges in focus and energy to our management or prove not to be successful.
From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases and out-licensing or in-licensing of
intellectual property, products or technologies. For example, in October 2018, we acquired all of the outstanding shares of Warp Drive Bio, Inc., which
became our direct wholly owned subsidiary, and in November 2023, we completed the EQRx Acquisition.
Additional potential transactions that we may consider in the future include a variety of business arrangements, including spin-offs, strategic partnerships,
joint ventures, restructurings, divestitures, business combinations and investments. Any future transactions could result in potentially dilutive issuances of
our equity securities, including our common stock, or the incurrence of debt, contingent liabilities, amortization expenses or acquired in-process research
and development expenses, any of which could affect our financial condition, liquidity and results of operations. Future acquisitions may also require us to
obtain additional financing, which may not be available on favorable terms or at all. These transactions may never be successful and may require
significant time and attention of management. In addition, the integration of any business that we may acquire in the future may disrupt our existing
business and may be a complex, risky and costly endeavor for which we may never realize the full benefits of the acquisition.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could
negatively impact our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use,
storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including
chemicals and biological and radioactive materials. Our operations also produce hazardous waste products. We generally contract with third parties for the
disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury
resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also
could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from
the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for
environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive
materials.
77
We or the third parties upon whom we depend are subject to risk from earthquakes, outbreak of disease, other natural disasters and catastrophic events
and may be subject to disruption as a result of war, terrorism, political unrest and other causes.
Our corporate headquarters and other facilities are located in the San Francisco Bay Area, which in the past has experienced severe earthquakes, wildfires
and flooding. We do not carry earthquake insurance. Earthquakes, wildfires or other natural disasters could severely disrupt our operations, and negatively
impact our business.
A significant natural disaster, power outage, or other catastrophic event, such as telecommunications failure, cyberattack, war, terrorist attack, sabotage,
geopolitical event, pandemic, or other public health crisis or other catastrophic occurrence that prevented us from using all or a significant portion of our
headquarters, that damaged critical infrastructure, such as our enterprise financial systems or manufacturing resource planning and enterprise quality
systems, or that otherwise disrupted operations, may make it difficult or, in certain cases, impossible, for us to continue our business for a substantial period
of time. The disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a
serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans,
which, particularly when taken together with our lack of earthquake insurance, could negatively impact our business.
Furthermore, escalation of geopolitical tensions, including as a result of the ongoing war between Russia and Ukraine or escalation of conflicts in the
Middle East, could impact our current or planned clinical operations and our business partners and suppliers, which could adversely affect our business,
partners, suppliers or the economy as a whole. The extent and duration of the military action, sanctions and resulting market disruptions could be
significant and have substantial impact on the global economy and our business for an unknown period of time, including limiting our ability to include
European or Middle Eastern sites as clinical trial locations in the future, as a result of which we may have to delay, reduce the scope of or suspend one or
more of our clinical trials.
Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems could result in lengthy interruptions to our
business or disruptions in our activities or the activities of our partners, suppliers or the economy as a whole. All of the aforementioned risks may be further
increased if our disaster recovery plans prove to be inadequate.
Our employees, independent contractors, vendors, principal investigators, CROs and consultants may engage in misconduct or other improper
activities, including non-compliance with regulatory standards and requirements and insider trading.
We are exposed to the risk that our employees, independent contractors, vendors, principal investigators, CROs and consultants may engage in fraudulent
conduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities
to us that violate the regulations of the FDA or comparable foreign regulatory authorities, including those laws requiring the reporting of true, complete and
accurate information to such authorities; healthcare fraud and abuse laws and regulations in the United States and abroad; or laws that require the reporting
of financial information or data accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws
and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or
prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials or creating fraudulent data in our
preclinical studies or clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify
and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in
controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure
to comply with these laws or regulations. Additionally, we are subject to the risk that a person could allege fraud or other misconduct, even if none
occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a
significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion
from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, and curtailment of our operations.
Risks related to our common stock and warrants
The price of our common stock is volatile and fluctuates substantially, which could result in substantial losses for investors.
Our stock price is highly volatile. The stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme
volatility that has often been unrelated to the operating performance of particular companies.
The market price for our common stock may be influenced by many factors, including:
•
our research and development efforts and our ability to discover and develop product candidates;
78
•
results of our clinical trials and preclinical studies or those of our competitors;
•
the success of competitive products or technologies;
•
regulatory or legal developments in the United States and other countries;
•
developments or disputes concerning patent applications, issued patents or other proprietary rights;
•
the recruitment or departure of key personnel;
•
the level of expenses related to our product candidates or clinical development programs;
•
the results of our efforts to discover, develop, acquire or in-license product candidates or companion diagnostics;
•
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
•
variations in our financial results or those of companies that are perceived to be similar to us;
•
changes in the structure of healthcare payment systems;
•
market conditions in the pharmaceutical and biotechnology sectors; and
•
general economic, industry and market conditions.
In addition, stock markets with respect to public companies, particularly companies in the biotechnology industry, have experienced significant price and
volume fluctuations that have affected and continue to affect, the stock prices of these companies. Stock prices of many companies, including
biotechnology companies, have fluctuated in a manner often unrelated to the operating performance of those companies. In the past, companies that have
experienced volatility in the trading price of their securities have been subject to securities class action litigation.
An active and liquid market for our common stock may not be sustained.
Our common stock is currently listed on the Nasdaq Global Select Market under the symbol “RVMD”. The price for our common stock may vary, and an
active and liquid market in our common stock may not be sustained. The lack of an active market may impair the value of your shares, your ability to sell
your shares at the time you wish to sell them and the prices that you may obtain for your shares. An inactive market may also impair our ability to raise
capital by selling our common stock and our ability to acquire other companies, products or technologies by using our common stock as consideration.
We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.
We do not currently intend to pay any cash dividends on our common stock for the foreseeable future. We currently intend to invest our future earnings, if
any, to fund our growth. Therefore, stockholders are not likely to receive any dividends on their common stock for the foreseeable future. Since we do not
intend to pay dividends, stockholders’ ability to receive a return on their investment will depend on any future appreciation in the market value of our
common stock. There is no guarantee that our common stock will appreciate or even maintain the price at which our holders have purchased it.
Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.
If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the market price of our
common stock could decline.
As of December 31, 2024, 31.7 million shares of common stock were subject to outstanding options, warrants or restricted stock units and were eligible, or
expected to become eligible, for sale in the public market to the extent permitted by the provisions of various vesting schedules, lock-up agreements and
Rule 144 and Rule 701 under the Securities Act. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public
market, the market price of our common stock could decline.
There is no guarantee that our public and private warrants will ever be in the money, and they may expire worthless.
We have public and private warrants that were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and EQRx (the Warrant Agreement). Following the EQRx Acquisition, these warrants became exercisable for shares of our common
stock, and we appointed Equiniti Trust Company, LLC as the warrant agent. These warrants entitle registered holders to purchase 0.1112 shares of our
common stock at an exercise price of $11.50 per such fractional
79
share of common stock. There is no guarantee that the warrants will ever be in the money prior to their expiration, and as such, the warrants could expire
worthless.
We may amend the terms of our public and private warrants in a manner that may be adverse to holders with the approval by the holders of at least
50% of the then-outstanding warrants. As a result, the exercise price of a holder’s warrants could be increased, the exercise period could be shortened
and the number of shares of our common stock purchasable upon exercise of a warrant could be decreased, all without the approval of that warrant
holder.
The Warrant Agreement provides that the terms of our public and private warrants may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding warrants to make any change
that adversely affects the interests of the registered holders. Accordingly, we may only amend the terms of these warrants in a manner adverse to a holder if
holders of at least 50% of the then-outstanding warrants approve of the amendment, including to, among other things, increase the exercise price of the
warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise
of a warrant.
We may redeem unexpired public and private warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their
warrants worthless.
We have the ability to redeem our outstanding public warrants at any time prior to their expiration (A) at a price of $0.01 per public warrant; provided that
the last reported sales price of our common stock equals or exceeds $161.87 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give
notice of such redemption to the public warrant holders and provided certain other conditions are met, and (B) at a price of $0.10 per public warrant;
provided that (i) holders will be able to exercise their public warrants on a cashless basis prior to redemption and receive that number of shares determined
by reference to an agreed table based on the redemption date and the “fair market value” of the common stock, (ii) if the last reported sales price of
Common Stock equals or exceeds $89.93 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a
public warrant as described in the “Description of Securities” filed as Exhibit 4.3 to this Annual Report on Form 10-K under the heading “Public warrants
— Anti-dilution Adjustments”) for any 20 trading days within the 30-trading day period ending three trading days before we send the notice of redemption
to the public warrant holders, (iii) if the closing price of our common stock for any 20 trading days within a 30-trading day period ending three trading days
before we send the notice of redemption to the public warrant holders is less than $161.87 per share (as adjusted), the private warrants must also be
concurrently called for redemption on the same terms as the outstanding public warrants and (iv) provided certain other conditions are met. A redemption
in accordance with (B) above may result in public warrant holders having to exercise the public warrants at a time when they are out-of-the-money or
receive nominal consideration from us for them.
The terms of the private warrants are substantially the same as the public warrants; provided, that, except as described above in the discussion of the
redemption of public warrants when the price per share of our common stock equals or exceeds $89.93, the private warrants are exercisable on a cashless
basis and are non-redeemable for cash so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by
someone other than the initial purchasers or their permitted transferees, the private warrants are redeemable by us and exercisable by such holders on the
same basis as the public warrants. Please see Exhibit 4.3 “Description of Securities — Warrants — Public Warrants” filed with this Annual Report on Form
10-K for additional information.
If and when these warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws. Redemption of the outstanding public and private warrants could force the warrant holders: (i)
to exercise their warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so; (ii) to sell their warrants at the
then-current market price when they might otherwise wish to hold their warrants; or (iii) to accept the nominal redemption price which, at the time the
outstanding warrants are called for redemption, is likely to be substantially less than the market value of their warrants.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes has been limited by “ownership changes” and may be further
limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), and corresponding provisions of state law, if a corporation
undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-
year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research and
development tax credits) to offset its post-change income or taxes may be limited. We have experienced ownership changes in the past, and we may
experience ownership changes in the future as a result of our public offerings or other changes in our stock ownership (some of which are not in our
control). Use of our federal and state net
80
operating loss carryforwards has been limited as a result of ownership changes and could be further limited if we experience additional ownership changes.
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to
entrenchment of management.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent changes in control or
changes in our management without the consent of our board of directors. These provisions include the following:
•
a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of our
board of directors;
•
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
•
the exclusive right of our board of directors to appoint a director to fill a vacancy created by the expansion of the board of directors or the
resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
•
the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those
shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a
hostile acquiror;
•
the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;
•
the required approval of at least 66 2/3% of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and
restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of
directors;
•
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our
stockholders;
•
the requirement that a special meeting of stockholders may be called only by our chief executive officer or president or by our board of
directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of
directors; and
•
advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters
to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to
elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
We are also subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law. Under Section 203, a corporation
may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three
years or, among other exceptions, the board of directors has approved the transaction.
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may
reduce the amount of money available to us.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each
case, to the fullest extent permitted by Delaware law.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements
that we have entered into with our directors and officers provide that:
•
we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the
fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to our best interests and, with respect to any criminal
proceeding, had no reasonable cause to believe such person’s conduct was unlawful;
•
we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;
81
•
we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such
directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification;
•
we are not obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person
against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to
indemnification;
•
the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements
with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and
•
we may not retroactively amend our amended and restated bylaws to reduce our indemnification obligations to our directors, officers,
employees and agents.
Our amended and restated certificate of incorporation and amended and restated bylaws provide for an exclusive forum in the Court of Chancery of
the State of Delaware for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial
forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the
exclusive forum for any state law derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action
asserting a claim against us arising pursuant to the Delaware General Corporation Law, any action to interpret, apply, enforce, or determine the validity of
our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the
internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the
Securities Exchange Act of 1934, as amended (the Exchange Act) or any other claim for which the federal courts have exclusive jurisdiction; and provided
further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may
be brought in another state or federal court sitting in the State of Delaware. Our amended and restated bylaws also provide that the federal district courts of
the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause or causes of action under the Securities Act.
Such provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint
and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any
part of the documents underlying the offering. Nothing in our amended and restated certificate of incorporation or amended and restated bylaws precludes
stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law.
We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by
chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited
schedule relative to other forums and protection against the burdens of multi-forum litigation. This choice of forum provision may limit a stockholder’s
ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders,
which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal
securities laws and the rules and regulations thereunder. Furthermore, the enforceability of similar choice of forum provisions in other companies’
certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable
or unenforceable. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek
to bring a claim in a venue other than those designated in the exclusive-forum provisions, and there can be no assurance that such provisions will be
enforced by a court in those other jurisdictions. If a court were to find the choice of forum provision in our amended and restated certificate of
incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could adversely affect our business, financial condition, results of operations and prospects.
General risk factors
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies.
To date, we have primarily financed our operations through the sale or issuance of preferred stock and common stock and upfront payments and research
and development cost reimbursement received in connection with our prior collaboration with Sanofi and the EQRx Acquisition. We will be required to
seek additional funding in the future to achieve our goals and may do so through a combination of public or private equity offerings, debt financings, credit
or loan facilities, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. If we raise additional capital
through marketing and distribution
82
arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to
our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. If we raise
additional funds by issuing equity securities, our stockholders may suffer dilution and the terms of any financing may adversely affect the rights of our
stockholders. For example, the EQRx Acquisition, an all-stock transaction pursuant to which we issued shares of our common stock according to a blended
formula, resulted in substantial dilution to our stockholders. In addition, as a condition to providing additional funds to us, future investors may demand,
and may be granted, rights superior to those of existing stockholders. Debt financing, if available, is likely to involve restrictive covenants limiting our
flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities
would receive any distribution of our corporate assets. Attempting to secure additional financing may also divert our management from our day-to-day
activities, which may adversely affect our ability to develop our product candidates.
Litigation or other legal proceedings, including proceedings related to intellectual property and securities class action lawsuits and derivative lawsuits,
could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings, may cause us to incur significant expenses, and could distract our technical and
management personnel from their normal responsibilities. There is considerable intellectual property litigation in the pharmaceutical industry. Additionally,
securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements or as a result of
stock price volatility. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments,
and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such
litigation or proceedings could result in substantial costs and monetary damages and thus substantially increase our operating losses and reduce the
resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other
resources to conduct such litigation or proceedings adequately. As noted above, some of our competitors may be able to sustain the costs of such litigation
or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of
patent litigation or other proceedings could compromise our ability to compete in the marketplace, including compromising our ability to raise the funds
necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development
collaborations that would help us commercialize our product candidates, if approved. See the description of certain current legal proceedings in “Legal
Proceedings” contained in Item 3 of this Annual Report on Form 10-K.
We are subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations. We
can face serious consequences for violations.
Among other matters, U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations (collectively,
Trade Laws), prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and
other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else
of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties,
imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.
We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other
organizations. We also expect our non-U.S. activities to increase in time. We plan to engage third parties for clinical trials and/or to obtain necessary
permits, licenses, patent registrations, and other regulatory approvals and we can be held liable for the corrupt or other illegal activities of our personnel,
agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.
We may be adversely affected by events in the global economy and events adversely affecting the financial services industry.
We may be adversely affected by general conditions in the global economy and in the global financial markets, including the current inflationary
environment. Increased inflation may result in decreased demand for our products (if approved), increased operating costs (including our labor costs),
reduced liquidity and limitations on our ability to access credit or otherwise raise debt and equity capital. In addition, the U.S. Federal Reserve has raised,
and may again in the future raise, interest rates in response to inflation. Increases in interest rates, especially if coupled with reduced government spending
and volatility in financial markets, could have the effect of further increasing economic uncertainty and heightening these risks.
Adverse developments that affect financial institutions or concerns or rumors about these events have in the past and may in the future lead to market-wide
liquidity problems. For example, in March 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation,
which appointed the U.S. Federal Deposit Insurance Corporation (FDIC) as receiver. Similarly, other institutions have been and may continue to be swept
into receivership. Uncertainty may remain over liquidity concerns in the
83
broader financial services industry, and there may be unpredictable impacts to our business and our industry. We cannot anticipate all the ways in which the
global financial market conditions could adversely impact our business in the future.
Although we assess our banking relationships as we believe necessary or appropriate, our access to deposits or other financial assets on a timely basis or in
adequate amounts could be significantly impaired by factors that affect the financial institutions with which we have banking relationships or the financial
markets or financial services industry generally. These factors could include, among others, events such as liquidity constraints or failures, the ability to
perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services
industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
We maintain our cash at financial institutions, in balances that may exceed federally insured limits.
We maintain the majority of our cash and cash equivalents in accounts at banking institutions in the United States that we believe are of high quality. Cash
held in these accounts may exceed the FDIC insurance limits. If these banking institutions were to fail, we could lose all or a portion of amounts held in
excess of these insurance limitations. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can
be no assurance that we would be able to access uninsured funds in a timely manner or at all.
We incur significantly increased costs as a result of operating as a public company, and our management devotes substantial time to new compliance
initiatives. We may fail to comply with the rules that apply to public companies, including Section 404 of the Sarbanes-Oxley Act of 2002 (Sarbanes-
Oxley), which could result in sanctions or other penalties that would harm our business.
We incur significant legal, accounting and other expenses as a public company, including costs resulting from public company reporting obligations under
the Exchange Act, and regulations regarding corporate governance practices. The listing requirements of the Nasdaq Global Select Market and the rules of
the SEC require that we satisfy certain corporate governance requirements relating to director independence, filing annual and interim reports, stockholder
meetings, approvals and voting, soliciting proxies, conflicts of interest and a code of conduct. Our management and other personnel devote a substantial
amount of time to comply with all of these requirements. Moreover, the reporting requirements, rules and regulations will increase our legal and financial
compliance costs and make some activities more time-consuming and costly. Any changes we make to comply with these obligations may not be sufficient
to allow us to satisfy our obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the
increase in potential litigation exposure associated with being a public company, could also make it more difficult for us to attract and retain qualified
persons to serve on our board of directors or board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’
and officers’ insurance, on acceptable terms. Stockholder activism, the current political environment and the current high level of government intervention
and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the
manner in which we operate our business in ways we cannot currently anticipate.
Our current shares outstanding and resulting market valuation do not reflect shares of our common stock issuable upon the exercise of warrants that
are exercisable at the discretion of the holders of such warrants. If we sell shares of our common stock in future financings, stockholders may
experience immediate dilution and, as a result, our stock price may decline.
We have issued in the past, and may from time to time issue, additional shares of common stock at a discount from the current trading price of our common
stock. As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount. In
addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities,
preferred stock or common stock. For example, in August 2024, we entered into a sales agreement with TD Securities (USA) LLC (TD Cowen), to sell
shares of our common stock, from time to time, with aggregate gross proceeds of up to $500 million, through an at-the-market equity offering program (the
2024 ATM) under which TD Cowen agreed to act as our sales agent. During the year ended December 31, 2024, we sold an aggregate of 1,147,893 shares
of common stock under the 2024 ATM, resulting in gross proceeds of $60.4 million. In November 2023, we completed the EQRx Acquisition, which was
an all-stock transaction pursuant to which we (i) issued shares of our common stock according to a blended formula, resulting in substantial dilution to our
stockholders, and (ii) assumed public and private warrants to purchase shares of our common stock. Additionally, in December 2024, we completed an
underwritten public offering that included the sale of pre-funded warrants to purchase 2,173,917 shares of our common stock. Until exercised, the shares
issuable upon the exercise of the warrants are not included in the number of our outstanding shares of common stock. If we issue common stock or
securities convertible into common stock in the future, our common stockholders would experience additional dilution and, as a result, our stock price may
decline.
84
If securities analysts do not continue to publish research or reports about our business or if they publish negative evaluations of our stock, the price of
our stock could decline.
The trading market for our common stock relies, in part, on the research and reports that industry or financial analysts publish about us or our business. If
few analysts publish research or reports about us, the trading price of our stock would likely decrease. If one or more of the analysts covering our business
downgrades their evaluations of our stock, the price of our stock could decline. If one or more of these analysts ceases to cover our stock, we could lose
visibility in the market for our stock, which, in turn, could cause our stock price to decline.
If we fail to maintain proper and effective internal controls over financial reporting, our ability to produce accurate and timely financial statements
could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
As a public company, we are subject to Section 404 of Sarbanes-Oxley and the related rules of the SEC, which generally require our management and
independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting.
In order to provide the reports required by these rules we must conduct reviews and testing of our internal controls. During the course of our review and
testing, we may identify deficiencies and be unable to remediate them before we must provide the required reports. Furthermore, if we have a material
weakness in our internal controls over financial reporting, we may not detect errors on a timely basis, and our financial statements may be materially
misstated. Further, failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective
control systems required of public companies, could also restrict our future access to the capital markets. We or our independent registered public
accounting firm may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting, which could harm our
operating results, cause investors to lose confidence in our reported financial information and cause the trading price of our stock to fall. In addition, as a
public company, we are required to file accurate and timely quarterly and annual reports with the SEC under the Exchange Act. In order to report our
results of operations and financial statements on an accurate and timely basis, we will depend on third-party vendors to provide timely and accurate notice
of their costs to us. Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares and
public warrants from the Nasdaq Global Select Market or other adverse consequences.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our
critical systems and information.
Our cybersecurity program is designed to align with industry standards and best practices for similarly situated companies in our industry and at our stage
of development, and includes benchmarking against standards such as the National Institute of Standards and Technology Cybersecurity Framework (the
NIST CSF). This does not imply that we meet any particular technical standards, specifications or requirements, only that we use the NIST CSF as a guide
to help us identify, assess and manage cybersecurity risks relevant to our business. We also monitor and evaluate our cybersecurity posture and
performance on an ongoing basis through periodic vulnerability scans, penetration tests and threat intelligence feeds. We use various tools and
methodologies to manage cybersecurity risk that are tested on a periodic cadence.
Our cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting
channels and governance processes that apply across the risk management program to other legal, compliance, strategic, operational and financial risk
areas.
Key elements of our cybersecurity risk management program include but are not limited to the following:
•
risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information;
•
a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls and (3) our
response to cybersecurity incidents;
85
•
the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes;
•
cybersecurity awareness training that is provided to our employees and contractors, including those who are involved in incident response;
•
a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
•
assessment of cybersecurity risks posed by third parties, including current and potential collaborators, service providers, suppliers, vendors
and other contractual counterparties, in each case, to the extent they have access to our critical systems or information.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us,
including our operations, business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are
reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For more information, see
the section titled “Risk Factor— Risks related to product development and regulatory process— Our business and operations, or those of our CROs or
other third parties, may suffer in the event of information technology system failures, cyberattacks or deficiencies in our cybersecurity, which could
materially affect our business, results of operations and financial condition.”.
Cybersecurity Governance
Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of
cybersecurity risks, including oversight of management’s implementation of our cybersecurity risk management program.
The Audit Committee receives scheduled annual reports from management on our cybersecurity risks, our cybersecurity risk management program and
other cybersecurity-related educational topics. In addition, management updates the Audit Committee as necessary, regarding other cybersecurity incidents,
including any material cybersecurity incidents.
The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. Our full board of directors also receives
briefings from management where it deems appropriate regarding cybersecurity.
Our management team—including our Chief Information Officer and our Vice President, Information Security, Risk and Compliance—is responsible for
assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management
program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our Chief Information Officer and
our Vice President, Information Security, Risk and Compliance have more than 40 years of combined experience in the field of IT.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents
through various means, which may include briefings from internal information security personnel; threat intelligence and other information obtained from
government, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT
environment.
Item 2. Properties.
Our corporate headquarters is located in Redwood City, California, where we lease and occupy approximately 233,065 square feet of office and laboratory
space. The term of our Redwood City lease expires in December 2035.
Our lease of approximately 22,000 square feet of office and laboratory space in Cambridge, Massachusetts, which was subleased to Casma Therapeutics,
Inc. expired in February 2023.
We believe our existing facilities are sufficient for our needs for the foreseeable future. To meet the future needs of our business, we may lease additional
or alternate space, and we believe suitable additional or alternative space will be available in the future on commercially reasonable terms.
Item 3. Legal Proceedings.
From time to time, we are and may become involved in litigation or other legal proceedings arising from the normal course of business activities.
Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation
cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs,
diversion of management resources, and other factors.
86
On December 9, 2024, Nemeth v. Casdin, et al., Case No. 2024-1268-KSJM (Del. Ch.), was filed in the Court of Chancery of the State of Delaware (the
Complaint) arising from CM Life Sciences III., Inc.’s (CMLS III) December 17, 2021 merger with EQRx., Inc. (Legacy EQRx) (the Merger). The
Complaint was filed by former stockholders of CMLS III and brings claims for breach of fiduciary duty and unjust enrichment against members of CMLS
III’s board of directors, CMLS III’s officers, and CMLS III’s sponsor in connection with the Merger. The Complaint also brings claims for aiding and
abetting breaches of fiduciary duties against certain investment firms involved with the merger process, the Company, solely as successor-in-interest to
EQRx, and Legacy EQRx’s former Executive Chairman and CEO, Alexis Borisy, who is also on our board of directors. Defendants’ response to the
Complaint is due on February 28, 2025.
At this juncture, we do not believe this action will have a material adverse impact on our operations or financial position. Although we believe a loss
relating to the Complaint is reasonably possible, given the early stage of the case (i.e., before any motion to dismiss rulings or discovery), we cannot make
an estimate regarding the range of loss. We intend to defend vigorously against the Complaint.
Item 4. Mine Safety Disclosures.
Not applicable.
87
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market price of common stock
Our common stock and public warrants are listed on the Nasdaq Global Select Market under the symbols “RVMD” and “RVMDW”, respectively. Prior to
February 13, 2020, there was no public trading market for our common stock.
As of February 21, 2025, there were 64 holders of record of our common stock and 5 holders of record of our public warrants. We believe the actual
number of holders of our common stock is greater than the number of record holders included herein as this number does not include holders whose shares
are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in
trust by other entities.
Dividend policy
We have never declared or paid cash dividends on our common stock. We intend to retain all available funds and any future earnings, if any, to fund the
development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination related
to dividend policy will be made at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial
condition, capital requirements, contractual restrictions, business prospects and other factors our board of directors might deem relevant.
Stock performance graph
This graph is not “soliciting material” or deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities
under that Section, and shall not be deemed incorporated by reference into any filing of Revolution Medicines, Inc. under the Securities Act of 1933, as
amended (the Securities Act), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The following graph compares the cumulative total return to stockholder return on our common stock relative to the cumulative total returns of the
NASDAQ Composite Index and the NASDAQ Biotechnology Index. An investment of $100 is assumed to have been made in our common stock and each
index on February 13, 2020 (the first day of trading of our common stock) and its relative performance is tracked through December 31, 2024. Pursuant to
applicable SEC rules, all values assume reinvestment of the full amount of all dividends; however, no dividends have been declared on our common stock
to date. The stockholder returns shown on the graph below are based on historical results and are not necessarily indicative of future performance, and we
do not make or endorse any predictions as to future stockholder returns.
88
Recent sales of unregistered securities
None.
Issuer Purchases of Equity Securities
None.
Item 6. [Reserved.]
89
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated
financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, this
discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. As a result of many factors, including
those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results
described or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage precision oncology company developing novel targeted therapies for RAS-addicted cancers. We possess sophisticated
structure-based drug discovery capabilities built upon deep chemical biology and cancer pharmacology know-how and innovative, proprietary technologies
that enable the creation of small molecules tailored to unconventional binding sites. Guided by our understanding of genetic drivers and adaptive resistance
mechanisms in cancer, we deploy precision medicine approaches to inform innovative monotherapy and combination regimens.
Our research and development pipeline comprises RAS(ON) inhibitors that bind directly to RAS variants, which we refer to as RAS(ON) Inhibitors,
and RAS companion inhibitors that target key nodes in the RAS pathway or associated pathways. Our RAS(ON) Inhibitors are designed to be used as
monotherapy, in combination with other RAS(ON) Inhibitors and/or in combination with RAS companion inhibitors or other therapeutic agents.
RAS(ON) Inhibitors
Our RAS(ON) Inhibitors are based on our proprietary tri-complex technology platform, which enables a highly differentiated approach to inhibiting
the active, GTP-bound form of RAS, which we refer to as RAS(ON). We are developing a portfolio of compounds that we believe were the first RAS(ON)
Inhibitors to use this mechanism of action. We believe that direct inhibitors of RAS(ON) suppress cell growth and survival and are less susceptible to
adaptive resistance mechanisms recognized for RAS(OFF) inhibitors.
We are evaluating our RAS(ON) Inhibitors alone and in combination with other drugs and investigational drug candidates, particularly in-pathway
agents. We believe tailored RAS(ON) Inhibitors will be useful to serve the diverse landscape of RAS-addicted cancers optimally. We believe that in some
cases, patients may experience maximal clinical benefit from the broad activity of our RAS(ON) multi-selective inhibitor, daraxonrasib (RMC-6236), if
approved. In others, we believe treatment with a RAS(ON) mutant-selective inhibitor may be optimal. We further believe that in some cases, it could be
beneficial to combine daraxonrasib with a RAS(ON) mutant-selective inhibitor, with daraxonrasib functioning as the backbone of these RAS(ON) Inhibitor
doublets. In addition, we believe that in some cases, combination of our RAS(ON) Inhibitors with standard of care therapies, including immunotherapies,
may be optimal.
We are advancing a deep pipeline of RAS(ON) Inhibitors, including daraxonrasib (RMC-6236), our RAS(ON) multi-selective inhibitor; elironrasib
(RMC-6291), our G12C-selective inhibitor; and zoldonrasib (RMC-9805), our G12D-selective inhibitor. Together, we consider these three clinical-stage
candidates as the first wave of RAS(ON) inhibitors that we are advancing through clinical development. We also currently plan to advance RMC-5127
(G12V) into clinical development. In addition, we have other preclinical-stage RAS(ON) inhibitor clinical development opportunities, including the
RAS(ON) mutant-selective inhibitors RMC-0708 (Q61H) and RMC-8839 (G13C).
Daraxonrasib (RMC-6236)
Daraxonrasib (RMC-6236), our RAS(ON) multi-selective inhibitor, is designed as an oral, RAS-selective tri-complex inhibitor of multiple
RAS(ON) variants containing cancer driver mutations at all three of the major RAS mutation hotspot positions (G12, G13 and Q61). Daraxonrasib inhibits
all three major RAS isoforms, suppressing the mutant cancer driver and cooperating wild-type RAS proteins.
A global, randomized Phase 3 registrational trial of daraxonrasib in the second-line (2L) treatment of patients with metastatic pancreatic ductal
adenocarcinoma (PDAC), which we call the RASolute 302 study, is ongoing. In the RASolute 302 study, we are randomizing patients in a 1:1 ratio to
receive either daraxonrasib at a dose of 300 mg daily or the investigator’s choice of chemotherapy. The RASolute 302 study has a nested trial design
allowing for a hierarchical sequence of statistical analysis, with patients with tumors harboring RAS G12X mutations serving as the core population which
will be tested first and all enrolled patients serving as the secondary population. We believe this nested design and hierarchical testing increases the
probability of trial success based on the core population while creating an opportunity to gain approval for a broader population. Patients in the RASolute
302 study will be evaluated for the dual primary endpoints of progression-free survival (PFS) and overall survival (OS) in the core
90
population, with secondary endpoints including PFS and OS in the secondary population and objective response rate (ORR) and quality of life measures.
We currently expect to substantially complete enrollment of the RASolute 302 study in 2025, to enable an expected clinical readout in 2026.
Having finalized the study protocol, we are now activating sites for a global, randomized Phase 3 registrational trial comparing daraxonrasib versus
docetaxel in patients with locally advanced or metastatic RAS-mutated non-small cell lung cancer (NSCLC) who have been treated with immunotherapy
and platinum-containing chemotherapy, which we call the RASolve 301 study. In the RASolve 301 study, we are randomizing patients in a 1:1 ratio to
receive either daraxonrasib or docetaxel. The RASolve 301 study has a nested trial design allowing for a hierarchical sequence of statistical analysis, with
patients with tumors harboring RAS G12X (other than G12C) mutations serving as the core population which will be tested first, and all enrolled patients
serving as the secondary population. We believe this nested design and hierarchical testing increases the probability of trial success based on the core
population while creating an opportunity to gain approval for a broader population. Patients in the RASolve 301 study will be evaluated for the dual
primary endpoints of PFS and OS in the core population, with secondary endpoints including PFS and OS in the secondary population and ORR and
quality of life measures.
We currently expect to initiate a global, randomized Phase 3 daraxonrasib monotherapy study in patients with first-line (1L) metastatic PDAC in the
second half of 2025. We also currently expect to initiate a global, randomized Phase 3 monotherapy study of daraxonrasib as adjuvant treatment for
patients with resectable PDAC in the second half of 2025.
On December 2, 2024 we reported updated clinical safety, tolerability, and activity data for daraxonrasib from our first-in-human monotherapy
study of daraxonrasib, which we refer to as the RMC-6236-001 study, in patients with previously treated RAS-mutant PDAC as of a data cutoff date of
July 23, 2024. We believe these data showed that daraxonrasib was generally well tolerated and demonstrated encouraging antitumor activity that
supported our initiation of the RASolute 302 study.
Also on December 2, 2024, we reported clinical safety and tolerability data as of a September 30, 2024 data cutoff date for daraxonrasib from the
RMC-6236-001 study in patients with NSCLC with tumors harboring RAS mutations. We also reported clinical activity data as of a September 30, 2024
data cutoff date for daraxonrasib from the RMC-6236-001 study in patients with NSCLC with tumors harboring RAS G12X mutations who had received
one or two prior lines of therapy which must have included prior immunotherapy and platinum chemotherapy administered either concurrently or
sequentially, but not docetaxel, a study population matching the planned RASolve 301 enrollees. We believe these data showed that daraxonrasib was
generally well tolerated and demonstrated encouraging antitumor activity that supported our initiation of the RASolve 301 study.
Based on our observations from the RMC-6236-001 study and our preclinical observations, we believe there is a potential opportunity to evaluate
daraxonrasib combinations in earlier lines of therapy in multiple tumor types, and we are currently evaluating several exploratory combination regimens
that include daraxonrasib in order to assess the potential for development in these settings. These combinations include daraxonrasib with pembrolizumab,
daraxonrasib with elironrasib, daraxonrasib with zoldonrasib and daraxonrasib with standard of care chemotherapy agents.
On December 2, 2024, we disclosed initial clinical safety and tolerability data as of a data cutoff date of October 28, 2024 from our clinical study of
the combination of daraxonrasib with pembrolizumab, which we believe showed the combination was generally well tolerated with limited hepatotoxicity.
Also on December 2, 2024, we disclosed initial clinical safety, tolerability and activity data as of a data cutoff date of October 28, 2024 from our
clinical study of the combination of daraxonrasib with elironrasib, which we believe showed the combination was generally well tolerated and provide
initial proof-of-mechanism for a RAS(ON) inhibitor doublet in patients with colorectal cancer (CRC) who were previously treated with KRAS(OFF) G12C
inhibitors. We believe these preliminary data observations support continued development of RAS(ON) inhibitor doublets in a broad range of tumor types
and earlier lines of therapy, including 1L patients with NSCLC carrying RAS G12C tumors.
In April 2024, at the American Association for Cancer Research (AACR) Annual Meeting 2024, we reported individual case studies from the RMC-
6236-001 study that showed examples of objective responses to daraxonrasib in patients with tumor types beyond PDAC or NSCLC, specifically patients
with melanoma and with CRC.
Elironrasib (RMC-6291)
Elironrasib (RMC-6291) is designed as a RAS(ON) oral tri-complex G12C-selective inhibitor. It is designed to exhibit subnanomolar potency for
suppressing RAS pathway signaling and growth of RAS G12C-bearing cancer cells and is engineered to be highly selective for RAS G12C over wild-type
RAS and other cellular targets. Elironrasib is designed to be differentiated from
91
first-generation KRAS(OFF) G12C inhibitors, which sequester the KRAS(OFF) G12C form, by its mechanism of directly inhibiting the RAS(ON) G12C
form.
On October 13, 2023, we reported interim preliminary safety and anti-tumor data from our ongoing first-in-human study of elironrasib, which we
refer to as the RMC-6291-001 study, as of an October 5, 2023 data cut-off date, which we believe provide preliminary evidence of clinically meaningful
differentiation of elironrasib from KRAS(OFF) G12C inhibitors.
We are evaluating several exploratory combination regimens that include elironrasib in order to assess the potential for development in earlier lines
of therapy. These combinations include elironrasib with pembrolizumab and, as discussed in the “Daraxonrasib (RMC-6236)” section above, elironrasib
with daraxonrasib. We are also planning a combination study of elironrasib with both daraxonrasib and pembrolizumab.
On December 2, 2024, we disclosed initial clinical safety, tolerability and activity data for the combination of daraxonrasib with elironrasib, as
discussed in the “Daraxonrasib (RMC-6236)” section above.
Also on December 2, 2024, we disclosed clinical safety and tolerability data as of a data cutoff date of October 28, 2024 for the combination of
elironrasib with pembrolizumab, which we believe showed the combination was generally well tolerated with limited hepatotoxicity.
Zoldonrasib (RMC-9805)
Zoldonrasib (RMC-9805) is designed as a RAS(ON) oral tri-complex G12D-selective inhibitor. It is designed to exhibit low nanomolar potency for
suppressing RAS pathway signaling and growth of RAS G12D-bearing cancer cells and is engineered to covalently inactivate RAS G12D irreversibly.
On October 25, 2024, we reported preliminary clinical safety, tolerability and activity data as of a data cutoff date of September 2, 2024 from our
first-in-human monotherapy study of zoldonrasib, which we refer to as the RMC-9805-001 study in patients with previously treated solid tumors harboring
KRAS G12D mutations.
We believe that these data support our ongoing development of zoldonrasib as a single agent and in combination with other therapies, including with
daraxonrasib. An exploratory combination study of zoldonrasib with daraxonrasib is ongoing. We currently expect to disclose additional zoldonrasib
clinical safety and antitumor activity data in the second quarter of 2025.
We currently expect to initiate one or more pivotal combination studies in 2026 that incorporate either zoldonrasib or elironrasib and currently
expect to share clinical data supporting these plans in the second or third quarter of 2025.
RMC-5127
RMC-5127 is designed as a RAS(ON) oral G12V-selective inhibitor. It is designed to exhibit picomolar potency for suppressing RAS pathway
signaling and growth of RAS G12V-bearing cancer cells and is engineered for selective inhibition of RAS G12V over other RAS isoforms via non-
covalent binding interactions. We currently expect to advance RMC-5127 to a clinic-ready stage in 2025 and to initiate a first-in-human dose escalation
clinical trial of RMC-5127 in 2026.
RMC-0708
RMC-0708 is designed as a RAS(ON) oral Q61H-selective inhibitor. It is designed to exhibit picomolar potency for suppressing RAS pathway
signaling and growth of RAS Q61H-bearing cancer cells and is engineered for selective inhibition of RAS Q61H over other RAS isoforms via non-
covalent binding interactions. Clinical development of RMC-0708 is subject to our continuing assessment of our portfolio priorities.
RMC-8839
RMC-8839 is designed as a RAS(ON) oral G13C-selective inhibitor. It is designed to exhibit picomolar potency for suppressing RAS pathway
signaling and growth of KRAS G13C-bearing cancer cells and is engineered to covalently inactivate KRAS G13C for irreversible inhibition. Clinical
development of RMC-8839 is subject to our continuing assessment of our portfolio priorities.
Other Development Opportunities
We have developed RAS companion inhibitors that are designed to suppress cooperating targets and pathways that sustain RAS-addicted cancers.
These compounds include RMC-4630, which is designed as a potent and selective inhibitor of SHP2; RMC-5552,
92
which is designed as a selective inhibitor of mTORC1 signaling in tumors; and RMC-5845, which is designed to target SOS1 a protein that plays a key role
in converting RAS(OFF) to RAS(ON) in cells. Additional clinical development of our RAS companion inhibitors is subject to our continuing assessment of
our portfolio priorities.
We are also developing preclinical next-generation programs that are designed to sustain our innovation platform beyond our current development-
stage assets.
Acquisition of EQRx, Inc.
On November 9, 2023 (the Closing Date), we completed the acquisition of EQRx, Inc. (the EQRx Acquisition), pursuant to the Agreement and Plan
of Merger, dated as of July 31, 2023 (the Merger Agreement). Pursuant to the Merger Agreement, EQRx, LLC survived as our wholly owned subsidiary.
On the Closing Date, each share of EQRx, Inc. common stock issued and outstanding immediately prior to the completion of the EQRx Acquisition
was converted into the right to receive 0.1112 shares of our common stock. Outstanding stock options, restricted stock units and restricted stock awards of
EQRx, Inc. were also converted into our common stock subject to the terms of the Merger Agreement. We issued 54.8 million shares of our common stock
and paid $4.0 million in taxes to satisfy statutory income tax withholding obligations in conjunction with the EQRx Acquisition.
As a result of the EQRx Acquisition, we acquired $1.1 billion in net cash, cash equivalents and marketable securities after deducting estimated
EQRx wind-down and transaction costs.
For additional information regarding the terms of the EQRx Acquisition, see “Note 3. Acquisition” in the “Notes to Consolidated Financial
Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K.
Aethon Collaboration
In March 2024, we entered into a collaboration agreement with Aethon Therapeutics, Inc. (Aethon) pursuant to which Aethon is conducting research
related to use of novel bispecific antibodies to mount an immune attack directed at the cancer cells targeted by our RAS(ON) Inhibitors (the Aethon
Collaboration Agreement). Pursuant to the Aethon Collaboration Agreement, we agreed to reimburse Aethon for preclinical activities, and we have an
option to conduct any clinical or commercial development that may arise from the collaboration.
Financial Operations Overview
Collaboration revenue
Collaboration revenue consisted of revenue under the Sanofi Agreement for our SHP2 program. We received a $50.0 million upfront payment from
Sanofi in July 2018 and received reimbursement for research and development services. The Sanofi Agreement was terminated in June 2023.
For further information on our revenue recognition policies, see “Note 2. Summary of significant accounting policies” in the “Notes to Consolidated
Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K.
Research and development expenses
We substantially rely on third parties to conduct our preclinical studies, clinical trials and manufacturing. We estimate research and development
expenses based on estimates of services performed, and we rely on third party contractors and vendors to provide us with timely and accurate estimates of
expenses of services performed to assist us in these estimates. Research and development expenses consist primarily of costs incurred for the development
of our product candidates and costs associated with identifying compounds through our discovery platform, which include:
•
external costs incurred under agreements with third-party contract organizations, investigative clinical trial sites that conduct research and
development activities on our behalf and consultants;
•
costs related to the production of preclinical, clinical and pre-launch materials, including fees paid to contract manufacturers;
•
laboratory and vendor expenses related to the execution of discovery programs, preclinical and clinical trials;
•
employee-related expenses, which include salaries, benefits and stock-based compensation; and
93
•
facilities and other expenses, which include allocated expenses for rent and maintenance of facilities, depreciation and amortization expense,
information technology and other supplies.
We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized
based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors, collaborators and third-
party service providers. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development
activities are deferred and recorded as prepaid assets. The prepaid amounts are then expensed as the related goods are delivered or as services are
performed.
We expect our research and development expenses to increase for the foreseeable future as we continue to invest in discovering and developing
product candidates and advancing product candidates into later stages of development, which may include conducting larger clinical trials. The process of
conducting the necessary research and development and clinical trials to seek regulatory approval for product candidates is costly and time-consuming, and
the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our
research and development projects or clinical trials or if and to what extent we will generate revenue from the commercialization and sale of any of our
product candidates, if approved.
General and administrative expenses
General and administrative expenses consist primarily of personnel-related costs, consultants and professional services expenses, including legal,
audit, accounting and human resources services, insurance, commercial preparation activities, allocated facilities and information technology costs, and
other general operating expenses not otherwise classified as research and development expenses. Personnel-related costs consist of salaries, benefits and
stock-based compensation. Facilities costs consist of rent, utilities and maintenance of facilities. We expect our general and administrative expenses to
increase for the foreseeable future due to anticipated increases in operating and commercial preparation activities, which may result in increases in
personnel-related costs associated with increased headcount, other administrative and professional services, and related overhead needed to support these
efforts.
Interest income
Interest income primarily consists of interest earned on and accretion of our cash equivalents and marketable securities.
Results of operations
Comparison of the years ended December 31, 2024 and 2023
Years Ended December 31,
2024
2023
Increase/
(decrease)
(in thousands)
Revenue:
Collaboration revenue
$
— $
11,580 $
(11,580)
Total revenue
—
11,580
(11,580)
Operating expenses:
Research and development
592,225
423,144
169,081
General and administrative
97,299
75,621
21,678
Total operating expenses
689,524
498,765
190,759
Loss from operations
(689,524)
(487,185)
(202,339)
Other income (expense), net:
Interest income
86,883
47,482
39,401
Other expense
(2,528)
(303)
(2,225)
Change in fair value of warrant liability and contingent earn-out
shares
4,323
115
4,208
Total other income, net
88,678
47,294
41,384
Loss before income taxes
(600,846)
(439,891)
(160,955)
Benefit from income taxes
753
3,524
(2,771)
Net loss
$
(600,093) $
(436,367) $
(163,726)
94
Collaboration revenue
Collaboration revenue in 2023 consisted of revenue under the Sanofi Agreement, which was terminated in June 2023. Collaboration revenue
decreased by $11.6 million, or 100%, during the year ended December 31, 2024 compared to 2023. The decrease in collaboration revenue in 2023 was a
result of the termination of the Sanofi Agreement.
Research and development expenses
Our research and development efforts during the year ended December 31, 2024 were focused on our clinical development programs and our
preclinical programs. The following table sets forth the components of our research and development expenses for the periods indicated:
Years Ended December 31,
2024
2023
Increase/
(decrease)
(in thousands)
Third-party research and development expenses:
Clinical Development Programs:
Daraxonrasib (RMC-6236)
$
168,911
$
107,947 $
60,964
Elironrasib (RMC-6291)
55,034
32,593
22,441
Zoldonrasib (RMC-9805)
64,112
40,657
23,455
RAS companion inhibitors
6,955
16,252
(9,297)
Preclinical programs
73,089
65,156
7,933
Total third-party research and development expenses
368,101
262,605
105,496
Salaries and other employee-related expenses
113,475
81,658
31,817
Stock-based compensation expense
50,973
34,126
16,847
Amortization of intangible assets
1,069
1,068
1
Other research and development costs
58,607
43,687
14,920
Total research and development expense
$
592,225
$
423,144 $
169,081
Research and development expenses increased by $169.1 million, or 40%, during the year ended December 31, 2024 compared to 2023. The
increase in research and development expenses during the year ended December 31, 2024 was primarily due to a $61.0 million increase in daraxonrasib
expenses, primarily attributable to higher clinical trial expenses; a $31.8 million increase in salaries and other employee-related expenses due to increased
headcount to support our research and development programs; a $23.5 million increase in zoldonrasib expenses, primarily attributable to higher clinical
trial expenses; a $22.4 million increase in elironrasib expenses, primarily attributable to higher clinical trial expenses; a $16.8 million increase in stock-
based compensation; a $14.9 million increase in other research and development expenses as a result of higher rent, utilities and information technology
expenses associated with increased headcount; and a $7.9 million increase in preclinical research portfolio expenses; partially offset by a $9.3 million
decrease in other RAS companion inhibitor program expenses.
General and administrative expenses
General and administrative expenses increased by $21.7 million, or 29%, during the year ended December 31, 2024 compared to 2023. The increase
in general and administrative expenses during the year ended December 31, 2024 was primarily due to a $6.7 million increase in pre-commercial
development expenses; a $4.5 million increase in salaries and other employee-related expenses due to increased headcount; a $4.5 million increase in
facilities and other allocated expenses as a result of higher rent, utilities and information technology expenses associated with increased headcount; a $3.3
million increase in legal and accounting fees; and a $1.2 million increase in insurance and other fees.
Interest income
Interest income increased by $39.4 million for the year ended December 31, 2024, compared to 2023 due to a larger cash, cash equivalents and
marketable securities balance and higher interest rates.
95
Comparison of the years ended December 31, 2023 and 2022
Years Ended December 31,
2023
2022
Increase/
(decrease)
(in thousands)
Revenue:
Collaboration revenue
$
11,580 $
35,380 $
(23,800)
Total revenue
11,580
35,380
(23,800)
Operating expenses:
Research and development
423,144
253,073
170,071
General and administrative
75,621
40,586
35,035
Total operating expenses
498,765
293,659
205,106
Loss from operations
(487,185)
(258,279)
(228,906)
Other income (expense), net:
Interest income
47,482
9,154
38,328
Interest expense
(303)
—
(303)
Change in fair value of warrant liability and contingent earn-out
shares
115
—
115
Total other income (expense), net
47,294
9,154
38,140
Loss before income taxes
(439,891)
(249,125)
(190,766)
Benefit from income taxes
3,524
420
3,104
Net loss
$
(436,367) $
(248,705) $
(187,662)
Collaboration revenue
Collaboration revenue consisted of revenue under the Sanofi Agreement, which was terminated in June 2023. Collaboration revenue decreased by
$23.8 million, or 67%, during the year ended December 31, 2023 compared to 2022. The decrease in collaboration revenue in 2023 was a result of lower
reimbursed expenses from Sanofi.
Research and development expenses
Research and development expenses increased by $170.1 million, or 67%, during the year ended December 31, 2023 compared to 2022. The
increase in research and development expenses during the year ended December 31, 2023 was primarily due to a $72.6 million increase in daraxonrasib
expenses, primarily attributable to clinical trial and clinical supply manufacturing expenses as daraxonrasib commenced clinical trials at the end of the
second quarter of 2022; a $24.1 million increase in salaries and other employee-related expenses due to increased headcount to support our research and
development programs; a $17.0 million increase in our preclinical research portfolio expenses; a $16.0 million increase in stock-based compensation
including $3.7 million in connection with the EQRx Acquisition; a $15.8 million increase in zoldonrasib expenses, which commenced clinical trials in the
third quarter of 2023; a $12.9 million increase in facilities and other allocated expenses as a result of higher rent, utilities and information technology
expenses associated with increased headcount; a $12.6 million increase in elironrasib expenses, which commenced clinical trials in the third quarter of
2022; and a $8.2 million increase in employee-related expenses in connection with the EQRx Acquisition; partially offset by a $9.0 million decrease in
SHP2 costs.
General and administrative expenses
General and administrative expenses increased by $35.0 million, or 86%, during the year ended December 31, 2023 compared to 2022. The increase
in general and administrative expenses during the year ended December 31, 2023 was primarily due to a $14.6 million increase in stock-based
compensation expense including $7.5 million in connection with the EQRx Acquisition; a $7.1 million increase in salaries and other employee-related
expenses due to increased headcount; a $6.1 million increase in employee-related expenses in connection with the EQRx Acquisition; a $3.2 million
increase in facilities and other allocated expenses as a result of higher rent, utilities and information technology expenses associated with increased
headcount; a $2.3 million increase in legal and accounting fees; and a $1.6 million increase in pre-commercial development expenses.
Interest income
Interest income increased by $38.3 million for the year ended December 31, 2023, compared to 2022 due to a larger cash, cash equivalents and
marketable securities balance and higher interest rates.
96
Liquidity and Capital Resources
In November 2021, we entered into a sales agreement with Cowen and Company, LLC, an affiliate of TD Securities (USA) LLC (TD Cowen), as
amended in March 2024, to sell shares of our common stock, from time to time, with aggregate gross proceeds of up to $250 million, through an at-the-
market equity offering program (the 2021 ATM). From November 2021 to August 2024, we sold an aggregate of 6,502,078 shares of our common stock
under the 2021 ATM, resulting in gross proceeds to us of $186.0 million. During the year ended December 31, 2024, we sold an aggregate of 1,294,050
shares of common stock under the 2021 ATM, resulting in gross proceeds of $60.8 million. In August 2024, we terminated the 2021 ATM and entered into
a new sales agreement with TD Cowen to sell shares of our common stock, from time to time, with aggregate gross proceeds of up to $500 million, through
an at-the-market equity offering program (the 2024 ATM). Through December 31, 2024, we have sold an aggregate of 1,147,893 shares of common stock
under the 2024 ATM, resulting in gross proceeds of $60.4 million.
In July 2022, we issued 13,225,000 shares of our common stock in an underwritten public offering at a price to the public of $20.00 per share, for
net proceeds of $248.1 million, after deducting underwriting discounts and commissions of $15.9 million and offering expenses of $0.5 million.
In March 2023, we issued 15,681,818 shares of our common stock in an underwritten public offering at a price to the public of $22.00 per share, for
net proceeds of $323.7 million, after deducting underwriting discounts and commissions of $20.7 million and expenses of $0.6 million.
In November 2023, we completed the EQRx Acquisition and issued 54,786,528 shares of common stock in the transaction in which we received
approximately $1.1 billion in net cash, cash equivalents and marketable securities after deducting EQRx wind-down and transition costs.
In December 2024, we issued and sold in an underwritten public offering (i) 16,576,088 shares of our common stock at a price to the public of
$46.00 per share and (ii) pre‑funded warrants to certain investors to purchase an aggregate of 2,173,917 shares of our common stock at a price of $45.9999
per pre-funded warrant. Each pre-funded warrant will be exercisable from the date of issuance until fully exercised, subject to an ownership limitation.
Total net proceeds from the offering were $823.0 million, after deducting underwriting discounts and commissions of $38.8 million and expenses of $0.6
million.
Our operations have been financed primarily by our public offerings of common stock, the EQRx Acquisition and $188.7 million received under the
Sanofi Agreement from June 2018 through June 2023 for upfront payments and for research and development cost reimbursement.
As of December 31, 2024, we had $2.3 billion in cash, cash equivalents and marketable securities.
As of December 31, 2024, we had an accumulated deficit of $1.7 billion. Our primary use of cash is to fund operating expenses, which consist
primarily of research and development expenditures related to our product candidates and our pre-clinical research portfolio, and to a lesser extent, general
and administrative expenditures. We expect our expenses to continue to increase in connection with our ongoing activities, particularly as we continue to
advance our product candidates into later stages of development, which includes conducting larger clinical trials, and increase our efforts of preparing to
become a commercial-stage company.
We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our planned operations for at least 12 months
following the date of this Annual Report on Form 10-K.
The timing and amount of our future funding requirements depends on many factors, including:
•
the scope, progress, results and costs of researching and developing our product candidates and programs, and of conducting preclinical
studies and clinical trials;
•
the cost of manufacturing our current and future product candidates for clinical trials in preparation for marketing approval and in preparation
for commercialization;
•
the timing of, and the costs involved in, obtaining marketing approvals for our product candidates if clinical trials are successful;
•
the cost of commercialization activities for any of our product candidates, whether alone or in collaboration, including marketing, sales and
distribution costs if any product candidate is approved for sale;
•
our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements;
•
the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs
and the outcome of such litigation;
97
•
the timing, receipt and amount of sales of, profit share or royalties on, our future products, if any;
•
the emergence of competing cancer therapies or other adverse market developments; and
•
any plans to acquire or in-license other programs or technologies.
We will require substantial additional financing for our development efforts for our current and future programs and to prepare for their potential
commercialization. We do not have any committed external source of funds or other support for these activities, and we expect to finance our cash needs
through a combination of public or private equity offerings, debt financings, credit or loan facilities, acquisitions, collaborations, strategic alliances,
licensing arrangements and other marketing or distribution arrangements. In addition, we may seek additional capital due to favorable market conditions or
strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If we need to raise additional capital to fund
our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have
to (i) delay, limit, reduce the scope of or terminate one or more of our preclinical studies, clinical trials, or other research and development activities or
eliminate one or more of our development programs altogether; or (ii) delay, limit, reduce the scope of or terminate our efforts to establish manufacturing
and sales and marketing capabilities or other activities that may be necessary to commercialize any future approved products, or reduce our flexibility in
developing or maintaining our sales and marketing strategy.
Cash Flows
The following table summarizes our consolidated cash flows for the periods indicated:
Year Ended December 31,
2024
2023
2022
(in thousands)
Net cash provided by (used in):
Operating activities
$
(557,436) $
(350,572) $
(224,401)
Investing activities
(554,394)
(342,598)
(24,116)
Financing activities
959,413
1,229,200
301,432
Net change in cash and cash equivalents
$
(152,417) $
536,030 $
52,915
Cash used in operating activities
During the year ended December 31, 2024, cash used in operating activities of $557.4 million was attributable to a net loss of $600.1 million,
partially offset by $42.3 million in non-cash charges and by a net change of $0.4 million in our operating assets and liabilities. The non-cash charges
primarily consisted of stock-based compensation expense of $79.2 million, depreciation and amortization of $7.6 million, amortization of operating lease
right-of-use asset of $4.2 million, offset by net amortization of premium on marketable securities of $44.6 million and change in the fair value of warrant
liability and contingent earn-out shares of $4.3 million. The change in operating assets and liabilities was primarily due to a $9.7 million increase in prepaid
expenses and other current assets, a $5.9 million increase in other noncurrent assets, a $6.5 million decrease in accounts payable, offset by a $22.0 million
increase in accrued expenses and other current liabilities primarily related to clinical trial and clinical supply manufacturing expenses and increased
personnel related expenses due to increased headcount and a $1.3 million decrease in accounts receivable.
During the year ended December 31, 2023, cash used in operating activities of $350.6 million was attributable to a net loss of $436.4 million,
partially offset by $49.0 million in non-cash charges and by a net change of $36.8 million in our operating assets and liabilities. The non-cash charges
primarily consisted of stock-based compensation expense of $61.8 million, depreciation and amortization of $6.1 million, amortization of operating lease
right-of-use asset of $3.2 million, offset by net amortization of premium on marketable securities of $22.2 million. The change in operating assets and
liabilities was primarily due to a $2.6 million increase in prepaid expenses and other current assets, a $4.5 million decrease in deferred revenue associated
with the Sanofi Agreement, a $1.5 million decrease in operating lease liability, a $3.9 million decrease in deferred tax liability, a $1.4 million increase in
other noncurrent assets, offset by a $32.5 million increase in accounts payable, $14.7 million increase in accrued expenses and other current liabilities
primarily related to clinical trial and clinical supply manufacturing expenses and increased personnel related expenses due to increased headcount and a
$3.4 million decrease in accounts receivable.
During the year ended December 31, 2022, cash used in operating activities of $224.4 million was attributable to a net loss of $248.7 million and by
a net change of $13.5 million in our operating assets and liabilities, partially offset by $37.8 million in non-cash charges. The non-cash charges primarily
consisted of stock-based compensation expense of $31.2 million, depreciation and amortization of $5.0 million, amortization of operating lease right-of-use
asset of $4.6 million offset by net amortization of premium on marketable securities of $3.1 million. The change in operating assets and liabilities was
primarily due to a $3.8 million increase in prepaid expenses and other current assets primarily resulting from the timing of prepayments made for research
and development activities, a $14.5 million decrease in deferred revenue associated with the Sanofi Agreement, a $2.4 million decrease in operating
98
lease liability, offset by a $7.3 million increase in accounts payable, $1.5 million increase in accrued expenses and other current liabilities and a $1.3
million decrease in accounts receivable.
Cash used in investing activities
During the year ended December 31, 2024, cash used in investing activities of $554.4 million was primarily comprised of purchases of marketable
securities of $2.1 billion and purchases of property and equipment of $10.3 million, offset by cash provided by maturities of marketable securities of $1.6
billion.
During the year ended December 31, 2023, cash used in investing activities of $342.6 million was primarily comprised of purchases of marketable
securities of $1.1 billion and purchases of property and equipment of $7.7 million, offset by cash provided by maturities of marketable securities of $724.0
million.
During the year ended December 31, 2022, cash used in investing activities of $24.1 million was primarily comprised of purchases of marketable
securities of $612.8 million and purchases of property and equipment of $10.8 million, offset by cash provided by maturities of marketable securities of
$599.5 million.
Cash provided by financing activities
During the year ended December 31, 2024, cash provided by financing activities of $959.4 million was comprised of $823.0 million in net proceeds
from the issuance of common stock and pre-funded warrants from the December 2024 underwritten public offering, $118.7 million in net proceeds from
the issuance of common stock under the 2024 ATM and the 2021 ATM, $12.3 million in proceeds from the issuance of common stock upon the exercise of
stock options and $5.0 million in proceeds from the issuance of common stock under the employee stock purchase plan.
During the year ended December 31, 2023, cash provided by financing activities of $1.2 billion was comprised of $840.8 million of cash, cash
equivalents and restricted cash acquired, net of $20.7 million transaction costs in connection with the EQRx Acquisition, $323.7 million in net proceeds
from the March 2023 underwritten public offering, $62.1 million in net proceeds from the issuance of common stock under the 2021 ATM, $3.3 million in
proceeds from the issuance of common stock under the employee stock purchase plan and $3.3 million in proceeds from the issuance of common stock
upon the exercise of stock options, offset by $4.0 million in tax payments in satisfaction of withholding tax requirements pursuant to the EQRx
Acquisition.
During the year ended December 31, 2022, cash provided by financing activities of $301.4 million was comprised of $248.1 million in net proceeds
from the July 2022 underwritten public offering, $49.9 million in net proceeds from the issuance of common stock under the 2021 ATM, $1.9 million in
proceeds from the issuance of common stock under the employee stock purchase plan and $1.5 million in proceeds from the issuance of common stock
upon the exercise of stock options.
Contractual Obligations and Commitments
We have contractual obligations related to our office and laboratory space lease in Redwood City, California, described in “Note 7. Commitments
and contingencies” in the “Notes to Consolidated Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K.
We enter into agreements in the ordinary course of business with contract research organizations for clinical trials, contract manufacturing
organizations to provide clinical trial materials and with vendors for preclinical studies and other services and products for operating purposes which are
generally cancelable at any time by us upon 30 to 90 days prior written notice.
Indemnification Agreements
We enter into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, we indemnify, hold
harmless and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret,
copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification
agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required
to make under these arrangements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification
agreements. As a result, we believe the fair value of these agreements is minimal.
Critical Accounting Policies, Significant Judgments and Use of Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements,
which have been prepared in accordance with United States generally accepted accounting principles (U.S.
99
GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses
incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies
discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving
management’s judgments and estimates.
Revenue recognition
We recognize revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606).
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which such entity expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as we
fulfill our obligations under arrangements, we perform the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance
obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v)
recognize revenue when (or as) the entity satisfies the performance obligation. At contract inception, once the contract is determined to be within the scope
of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each
promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance
obligation when (or as) the performance obligation is satisfied.
We enter into collaboration agreements under which we may obtain upfront license fees, research and development funding, and development,
regulatory and commercial milestone payments and royalty payments. Our performance obligations under these arrangements may include licenses of
intellectual property, sales and distribution rights, research and development services, delivery of manufactured product and/or participation on joint
steering committees.
Licenses of intellectual property: If the license to our intellectual property is determined to be distinct from the other performance obligations
identified in the arrangement, we recognize revenue from upfront license fees allocated to the license when the license is transferred to the customer and
the customer is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the
combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time,
the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the
measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
Research, development and regulatory milestone payments: At the inception of each arrangement that includes research, development, or regulatory
milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the
transaction price. We use the most likely amount method for research, development and regulatory milestone payments. Under the most likely amount
method, an entity considers the single most likely amount in a range of possible consideration amounts. If it is probable that a significant revenue reversal
would not occur, the associated milestone value is included in the transaction price.
Sales-based milestones and royalties: For arrangements that include sales-based milestone or royalty payments based on the level of sales, and in
which the license is deemed to be the predominant item to which the sales-based milestone or royalties relate to, we recognize revenue in the period in
which the sales-based milestone is achieved and in the period in which the sales associated with the royalty occur. To date, we have not recognized any
sales-based milestone or royalty revenue resulting from our collaboration arrangements.
The transaction price for each collaboration agreement is determined based on the amount of consideration we expect to be entitled for satisfying all
performance obligations within the agreement. Significant judgment may be required in determining the amount of variable consideration to be included in
the transaction price. We use the most likely amount method to determine variable consideration and will re-evaluate the transaction price in each reporting
period and as uncertain events are resolved or other changes in circumstances occur.
100
Revenue is recognized based on actual costs incurred as a percentage of total estimated costs to be incurred over the performance obligation as we
fulfill our performance obligations. A cost-based input method of revenue recognition requires management to make estimates of costs to complete our
performance obligations. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative
effect of revisions to estimated costs to fulfill our performance obligations will be recorded in the period in which changes are identified and amounts can
be reasonably estimated.
Accrued research and development expenses
We accrue for estimated costs of research and development activities performed by third-party service providers, which include pre-clinical studies,
clinical trials and contract manufacturing activities. We record the estimated costs of research and development activities based upon the estimated services
provided but not yet invoiced and include these costs in accrued expenses and other payables in our consolidated balance sheets and within research and
development expense in our consolidated statements of operations. We accrue for these costs based on various factors such as estimates of the work
completed and in accordance with agreements established with our third-party service providers. Further, we accrue expenses related to clinical trials based
on the level of patient enrollment and activity according to the related agreement. We monitor patient enrollment levels and related activity to the extent
reasonably possible and make judgments and estimates in determining the accrued balance in each reporting period. If we underestimate or overestimate
the level of services performed or the costs of these services, our actual expenses could differ from our estimates. To date, we have not experienced
significant changes in our estimates of preclinical studies and clinical trial accruals.
Stock-based compensation
We maintain an equity incentive plan as a long-term incentive for employees, consultants and members of our board of directors. The plan allows
for the issuance of non-statutory options (NSOs), incentive stock options (ISOs), restricted stock unit awards (RSUs) to employees and NSOs and RSUs to
nonemployees.
Stock-based compensation is measured using estimated grant date fair value and recognized as compensation expense over the service period in
which the awards are expected to vest. The grant date fair value of an RSU award is based on our stock price on the date of grant. For options, we estimate
the grant date fair value, and the resulting stock-based compensation, using the Black-Scholes option-pricing model, and we use the straight-line method
for expense attribution. The Black-Scholes model requires us to make assumptions and judgments about the variables used in the calculations, including the
expected term (weighted-average period of time that the options granted are expected to be outstanding), the expected volatility of our common stock, the
related risk-free interest rate and the expected dividend. We have elected to recognize forfeitures of stock-based awards as they occur.
The Black-Scholes option-pricing model requires the use of highly subjective assumptions to determine the fair value of stock-based awards. These
assumptions include:
•
Expected Term—The expected term is calculated using the simplified method, which is available where there is insufficient historical data
about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the
contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the
maximum contractual expiration date is used as the expected term under this method.
•
Expected Volatility—Given that we do not have sufficient trading history for our common stock, the expected volatility was estimated based
on the average volatility of the Company and comparable publicly traded biotechnology companies over a period equal to the expected term
of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty.
•
Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods
corresponding with the expected term of the option.
•
Expected Dividend—We have never paid dividends on our common stock and have no plans to pay dividends on our common stock.
Therefore, we used an expected dividend yield of zero.
Recent Accounting Pronouncements
For a description of the expected impact of recent accounting pronouncements, see “Note 2. Summary of significant accounting policies” in the
“Notes to Consolidated Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest rate risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. The primary objective
of our investment activities is to preserve capital to fund our operations. We also seek to maximize income
101
from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high
credit quality and short-term duration, invested in compliance with our policy.
We held cash, cash equivalents and marketable securities of $2.3 billion and $1.9 billion as of December 31, 2024 and 2023, respectively, which
consisted of bank deposits, money market funds, U.S. government debt securities, U.S. government agency bonds, commercial paper and corporate bonds.
Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations in interest income have not been significant for us.
Due to the short-term maturities of our cash equivalents and marketable securities, an immediate one percent change in interest rates would not have a
material effect on the fair value of our cash equivalents and marketable securities.
Foreign currency risk
Our expenses are generally denominated in U.S. dollars. However, we have entered into a limited number of contracts with vendors for research and
development services with payments denominated in foreign currencies, including the Euro, British Pound and Chinese Yuan. We are subject to foreign
currency transaction gains or losses on our contracts denominated in foreign currencies. To date, foreign currency transaction gains and losses have not
been material to our consolidated financial statements, and we have not had a formal hedging program with respect to foreign currency. A 10% increase or
decrease in current exchange rates would not have a material effect on our financial results.
Item 8. Financial Statements and Supplementary Data.
102
REVOLUTION MEDICINES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
103
Consolidated Balance Sheets
105
Consolidated Statements of Operations and Comprehensive Loss
106
Consolidated Statements of Stockholders’ Equity
107
Consolidated Statements of Cash Flows
108
Notes to Consolidated Financial Statements
109
103
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Revolution Medicines, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Revolution Medicines, Inc. and its subsidiaries (the “Company”) as of December 31,
2024 and 2023, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for each of the
three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also
have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over
Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the
Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
104
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
External Research and Development Costs.
As described in Note 2 to the consolidated financial statements, research and development expenses consist of costs incurred for the Company’s own
research and development activities and are expensed as incurred. Research and development costs consist of salaries and benefits, including associated
stock-based compensation, and laboratory supplies and facility costs, as well as external costs paid to other entities that conduct certain research and
development activities on the Company’s behalf. As disclosed by management, certain development activities are based on an evaluation of the progress to
completion of specific tasks using information and data provided to the Company by its vendors, collaborators and third-party service providers.
Management estimates research and development expenses based on estimates of services performed and relies on third party contractors and vendors to
provide timely and accurate estimates of expenses of services performed to assist in these estimates. The Company’s research and development expense for
the year ended December 31, 2024, was $592.2 million, a majority of which relates to external research and development costs.
The principal consideration for our determination that performing procedures relating to external research and development costs is a critical audit matter is
a high degree of auditor effort in performing procedures related to the Company’s external research and development costs.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to external research and development costs. These procedures
also included, among others, testing external research and development costs on a sample basis by obtaining and inspecting source documents, such as the
underlying contract research organization agreements, purchase orders, invoices received, and information received from certain third party service
providers, where applicable.
/s/ PricewaterhouseCoopers LLP
San Jose, California
February 26, 2025
We have served as the Company’s auditor since 2017.
105
REVOLUTION MEDICINES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
543,064 $
696,148
Marketable securities
1,746,235
1,156,807
Accounts receivable
—
1,254
Prepaid expenses and other current assets
38,333
25,072
Total current assets
2,327,632
1,879,281
Property and equipment, net
24,289
22,865
Operating lease right-of-use asset
117,534
77,149
Intangible assets, net
56,670
57,739
Goodwill
14,608
14,608
Restricted cash
3,698
3,031
Other noncurrent assets
13,870
7,032
Total assets
$
2,558,301 $
2,061,705
Liabilities and stockholdersʼ equity
Current liabilities:
Accounts payable
$
54,427 $
61,788
Accrued expenses and other current liabilities
96,615
74,694
Operating lease liability, current
12,872
7,369
Total current liabilities
163,914
143,851
Deferred tax liability
2,353
3,115
Operating lease liability, noncurrent
122,971
80,575
Warrant liability
3,189
6,512
Other noncurrent liabilities
670
1,458
Total liabilities
293,097
235,511
Commitments and contingencies (Note 8)
Stockholdersʼ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at
December 31, 2024 and December 31, 2023, respectively; none
issued and outstanding at December 31, 2024 and December 31, 2023, respectively
—
—
Common stock, $0.0001 par value; 300,000,000 shares authorized as of
December 31, 2024 and December 31, 2023, respectively; 185,896,625 and 170,234,594 shares
issued as of December 31, 2024 and December 31, 2023; 185,896,625 and 164,674,594 shares
outstanding as of December 31, 2024 and December 31, 2023, respectively
18
16
Additional paid-in capital
4,001,666
2,963,342
Accumulated other comprehensive income
1,321
544
Accumulated deficit
(1,737,801 )
(1,137,708 )
Total stockholdersʼ equity
2,265,204
1,826,194
Total liabilities and stockholdersʼ equity
$
2,558,301 $
2,061,705
The accompanying notes are an integral part of these Consolidated Financial Statements.
106
REVOLUTION MEDICINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share data)
Year Ended December 31,
2024
2023
2022
Revenue:
Collaboration revenue
$
— $
11,580 $
35,380
Total revenue
—
11,580
35,380
Operating expenses:
Research and development
592,225
423,144
253,073
General and administrative
97,299
75,621
40,586
Total operating expenses
689,524
498,765
293,659
Loss from operations
(689,524)
(487,185)
(258,279)
Other income (expense), net:
Interest income
86,883
47,482
9,154
Other expense
(2,528 )
(303)
—
Change in fair value of warrant liability and contingent earn-out shares
4,323
115
—
Total other income, net
88,678
47,294
9,154
Loss before income taxes
(600,846)
(439,891)
(249,125)
Benefit from income taxes
753
3,524
420
Net loss
$
(600,093) $
(436,367) $
(248,705)
Net loss per share attributable to common stockholders, basic and diluted
$
(3.58) $
(3.86) $
(3.08)
Weighted-average common shares used to compute net loss per share, basic and
diluted
167,737,672
113,149,869
80,626,525
Comprehensive loss:
Net loss
$
(600,093) $
(436,367) $
(248,705)
Other comprehensive income (loss):
Unrealized gain (loss) on investments, net
777
2,324
(1,404)
Comprehensive loss
$
(599,316) $
(434,043) $
(250,109)
The accompanying notes are an integral part of these Consolidated Financial Statements.
107
REVOLUTION MEDICINES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share and per share data)
Accumulated
Additional
Other
Total
Common Stock
Paid-in
Comprehensive
Accumulated
Stockholders'
Shares
Amount
Capital
Income/ (Loss)
Deficit
Equity
Balance at December 31, 2021
74,142,619 $
8 $ 1,055,572 $
(376 ) $
(452,636 ) $
602,568
Issuance of common stock pursuant to stock option exercises
249,544
—
1,481
—
—
1,481
Issuance of common stock from follow-on public offering, net of offering costs of $16,374
13,225,000
1
248,125
—
—
248,126
Issuance of common stock related to vesting of restricted stock units
278,848
—
—
—
—
—
Issuance of common stock related to employee stock purchase plan
130,327
—
1,864
—
—
1,864
Issuance of common stock from at-the-market offering
2,385,846
—
49,919
—
—
49,919
Repurchases of early exercised stock
(272 )
—
—
—
—
—
Vesting of early exercised stock options
—
—
143
—
—
143
Stock-based compensation expense
—
—
31,196
—
31,196
Net unrealized loss on marketable securities
—
—
—
(1,404 )
—
(1,404 )
Net loss
—
—
—
—
(248,705 )
(248,705 )
Balance at December 31, 2022
90,411,912 $
9 $ 1,388,300 $
(1,780 ) $
(701,341 ) $
685,188
Issuance of common stock pursuant to stock option exercises
524,094
—
3,316
—
—
3,316
Issuance of common stock from follow-on public offering, net of offering costs of $21,294
15,681,818
2
323,704
—
—
323,706
Issuance of common stock in connection with acquisition of EQRx, Inc., net of transaction costs
of $20,717
54,786,528
5
1,120,880
—
—
1,120,885
Issuance of common stock from at-the-market offering
2,482,880
—
62,053
—
—
62,053
Issuance of common stock related to vesting of restricted stock units
576,974
—
—
—
—
—
Issuance of common stock related to employee stock purchase plan
210,679
—
3,317
—
—
3,317
Repurchases of early exercised stock
(291 )
—
—
—
—
—
Stock-based compensation expense
—
—
61,772
—
—
61,772
Net unrealized gain on marketable securities
—
—
—
2,324
—
2,324
Net loss
—
—
—
—
(436,367 )
(436,367 )
Balance at December 31, 2023
164,674,594 $
16 $ 2,963,342 $
544 $
(1,137,708 ) $
1,826,194
Issuance of common stock pursuant to stock option exercises
927,275
—
12,330
—
—
12,330
Issuance of common stock from follow-on public offering, net of offering costs of $34,881
16,576,088
2
727,618
—
—
727,620
Issuance of pre-funded warrants, net of issuance costs of $4,578
—
—
95,422
—
—
95,422
Issuance of common stock from at-the-market offering
2,441,943
—
118,728
—
—
118,728
Issuance of common stock related to vesting of restricted stock units
1,011,255
—
—
—
—
—
Issuance of common stock related to employee stock purchase plan
265,470
—
5,029
—
—
5,029
Stock-based compensation expense
—
—
79,197
—
—
79,197
Net unrealized gain on marketable securities
—
—
—
777
—
777
Net loss
—
—
—
—
(600,093 )
(600,093 )
Balance at December 31, 2024
185,896,625 $
18 $ 4,001,666 $
1,321 $
(1,737,801 ) $
2,265,204
The accompanying notes are an integral part of these Consolidated Financial Statements.
108
REVOLUTION MEDICINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024
2023
2022
Cash flows from operating activities
Net loss
$
(600,093 )
$
(436,367 ) $
(248,705 )
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of fixed assets
118
52
19
Amortization of intangible assets
1,069
1,068
1,069
Stock-based compensation expense
79,197
61,772
31,196
Depreciation and amortization
6,559
5,042
3,972
Change in fair value of warrant liability and contingent earn-out shares
(4,323 )
115
—
Net amortization of premium or discount on marketable securities
(44,565 )
(22,205 )
(3,078 )
Amortization of operating lease right-of-use asset
4,196
3,199
4,615
Changes in operating assets and liabilities:
Accounts receivable
1,254
3,419
1,256
Prepaid expenses and other current assets
(9,698 )
(2,646 )
(3,779 )
Accounts payable
(6,465 )
32,469
7,288
Accrued expenses and other current liabilities
21,985
14,668
1,502
Deferred revenue
—
(4,459 )
(14,472 )
Operating lease liability
(245 )
(1,532 )
(2,428 )
Deferred tax liability
(762 )
(3,910 )
(419 )
Other noncurrent assets
(5,875 )
(1,414 )
(2,247 )
Other noncurrent liabilities
212
157
(190 )
Net cash used in operating activities
(557,436 )
(350,572 )
(224,401 )
Cash flows from investing activities
Purchases of marketable securities
(2,136,623 )
(1,058,916 )
(612,769 )
Maturities of marketable securities
1,592,537
724,047
599,469
Purchases of property and equipment
(10,308 )
(7,729 )
(10,816 )
Net cash used in investing activities
(554,394 )
(342,598 )
(24,116 )
Cash flows from financing activities
Cash, cash equivalents and restricted cash acquired in connection with EQRx Acquisition, net of
transaction costs
—
840,834
—
Proceeds from issuance of common stock, net of issuance costs
727,620
323,706
248,126
Proceeds from issuance of pre-funded warrants, net of transaction costs
95,422
—
—
Proceeds from issuance of common stock from at-the-market offering, net of transaction costs
118,728
62,053
49,919
Proceeds from issuance of common stock under equity incentive plans
12,330
3,316
1,481
Proceeds from issuance of common stock related to employee stock purchase plan
5,029
3,317
1,864
Tax payment for common stock withheld in satisfaction of withholding tax requirements
—
(4,026 )
—
Payments of deferred offering costs
284
—
42
Net cash provided by financing activities
959,413
1,229,200
301,432
Net increase (decrease) in cash, cash equivalents and restricted cash
(152,417 )
536,030
52,915
Cash, cash equivalents and restricted cash - beginning of year
699,179
163,149
110,234
Cash, cash equivalents and restricted cash - end of year
$
546,762
$
699,179 $
163,149
Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets
Cash and cash equivalents
543,064
696,148
161,412
Restricted cash
3,698
3,031
1,737
Cash, cash equivalents and restricted cash - end of period
$
546,762
$
699,179 $
163,149
Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock for EQRx acquisition
$
—
$
1,085,676 $
—
Fair value of net assets acquired in connection with EQRx Acquisition
—
291,475
—
Purchases of property and equipment in accounts payable and accrued expenses and other current
liabilities
1,576
2,611
1,419
Right-of-use assets obtained in exchange for operating lease liabilities
44,581
25,271
—
The accompanying notes are an integral part of these Consolidated Financial Statements.
109
REVOLUTION MEDICINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Revolution Medicines, Inc. (the Company) is a clinical-stage precision oncology company focused on developing novel targeted therapies for RAS-
addicted cancers. The Company was founded in October 2014 and is headquartered in Redwood City, California.
Liquidity
The Company has incurred net operating losses in each year since inception. As of December 31, 2024, the Company had an accumulated deficit of
$1.7 billion. Management believes that its existing cash, cash equivalents and marketable securities will enable the Company to fund its planned operations
for at least 12 months following the issuance date of these consolidated financial statements. The Company has been able to fund its operations through the
issuance and sale of common stock and redeemable convertible preferred stock, the acquisition of EQRx, Inc. (EQRx), and upfront payments and research
and development cost reimbursement received under the Company’s prior collaboration agreement with Genzyme Corporation, an affiliate of Sanofi.
Future capital requirements will depend on many factors, including the timing and extent of spending on research and development. There can be no
assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all.
Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending should additional capital not become
available could have a material adverse effect on the Company’s ability to achieve its business objectives.
Public offerings
In July 2022, the Company issued and sold 13,225,000 shares of its common stock in an underwritten public offering (including the exercise in full
by the underwriters of their option to purchase an additional 1,725,000 shares of the Company’s common stock) at a price to the public of $20.00 per share,
for net proceeds of $248.1 million, after deducting underwriting discounts and commissions of $15.9 million and expenses of $0.5 million.
In March 2023, the Company issued and sold 15,681,818 shares of its common stock in an underwritten public offering (including the exercise in
full by the underwriters of their option to purchase an additional 2,045,454 shares of the Company’s common stock) at a price to the public of $22.00 per
share, for net proceeds of $323.7 million, after deducting underwriting discounts and commissions of $20.7 million and expenses of $0.6 million.
In December 2024, the Company issued and sold in an underwritten public offering (i) 16,576,088 shares of its common stock in an underwritten
public offering (including the exercise in full by the underwriters of their option to purchase an additional 2,445,652 shares of the Company’s common
stock) at a price to the public of $46.00 per share and (ii) pre‑funded warrants to certain investors to purchase an aggregate of 2,173,917 shares of the
Company’s common stock at a price of $45.9999 per pre-funded warrant. Each pre-funded warrant will be exercisable from the date of issuance until fully
exercised, subject to an ownership limitation. Total net proceeds were $823.0 million, after deducting underwriting discounts and commissions of $38.8
million and expenses of $0.6 million.
In November 2021, the Company entered into a sales agreement with Cowen and Company, LLC, an affiliate of TD Securities (USA) LLC (TD
Cowen), as amended in March 2024, to sell shares of its common stock, from time to time, with aggregate gross proceeds of up to $250 million, through an
at-the-market equity offering program (the 2021 ATM Program). During the year ended December 31, 2022, the Company sold an aggregate of 339,302
shares of common stock under the 2021 ATM Program resulting in gross proceeds to the Company of $10.4 million, with net proceeds to the Company of
$10.1 million after deducting commissions and expenses. During the year ended December 31, 2023, the Company sold an aggregate of 2,482,880 shares
of common stock under the 2021 ATM Program resulting in gross proceeds to the Company of $63.5 million, with net proceeds to the Company of $62.1
million after deducting commissions and expenses. During the year ended December 31, 2024, the Company sold an aggregate of 1,294,050 shares of
common stock under the 2021 ATM Program, resulting in gross proceeds of $60.8 million, with net proceeds to the Company of $59.2 million after
deducting commissions and expenses.
In August 2024, the Company entered into a new sales agreement with TD Cowen to sell shares of the Company’s common stock, from time to
time, with aggregate gross proceeds of up to $500 million, through an at-the-market equity offering program (the 2024 ATM Program). The 2024 ATM
Program replaced the 2021 ATM Program and any unused balance remaining under the 2021 ATM Program is no longer available. During the year ended
December 31, 2024, the Company sold an aggregate of 1,147,893 shares
110
of common stock under the 2024 ATM Program, resulting in gross proceeds of $60.4 million, with net proceeds to the Company of $59.5 million after
deducting commissions and expenses.
2. Summary of significant accounting policies
Basis of presentation
The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (GAAP)
and applicable rules of the Securities and Exchange Commission (SEC) regarding financial reporting and, in the opinion of management, include all
normal and recurring adjustments which are necessary to state fairly the Company’s financial position and results of operations for the reported periods.
The consolidated financial statements for the years ended December 31, 2024, 2023 and 2022 include the accounts of the Company and its wholly owned
subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The functional and reporting currency of the Company and
its subsidiaries is the U.S. dollar.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including the fair value of assets
acquired and liabilities assumed and related purchase price allocation, revenue recognition, clinical accruals, income taxes, useful lives of property and
equipment and intangible assets, impairment of goodwill and intangibles, impairment of in-process research and development and developed technologies,
the incremental borrowing rate for determining operating lease assets and liabilities, warrant liabilities and stock-based compensation. Estimates are based
on historical experience, complex judgments, facts and circumstances available at the time and various other assumptions that are believed to be reasonable
under the circumstances but are inherently uncertain and unpredictable. Actual results could materially differ from the Company’s estimates, and there may
be changes to the estimates in future periods.
Cash and cash equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash
equivalents. Cash equivalents consist of amounts invested in money market funds, commercial paper, government securities and corporate bonds with
original maturities of three months or less at the date of purchase.
Marketable securities
Investments in marketable securities primarily consist of U.S. government debt securities, U.S. government agency bonds, commercial paper, and
corporate bonds. The Company has classified its marketable securities as available-for-sale and may sell these securities prior to their stated maturities. The
Company views these marketable securities as available to support current operations and classifies marketable securities with maturities beyond 12
months as current assets. The Company’s investments in marketable securities are carried at estimated fair value, which is derived from independent
pricing sources based on quoted prices in active markets for similar securities. Unrealized gains and losses are reported as a component of accumulated
other comprehensive income (loss). The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to
maturity, which is included in interest income on the consolidated statements of operations and comprehensive loss. Realized gains and losses are included
in interest income on the consolidated statements of operations and comprehensive loss.
The Company periodically evaluates its investments to assess whether those with unrealized loss positions are other than temporarily impaired. The
Company considers various factors in determining whether to recognize an impairment charge. If the Company determines that the decline in an
investment’s fair value is other-than-temporary, the difference is recognized as an impairment loss in the consolidated statements of operations and
comprehensive loss. As of December 31, 2024, no other-than-temporary-impairment has been recorded.
Restricted cash
As of December 31, 2024 and 2023, the Company had $3.7 million and $3.0 million, respectively, of noncurrent restricted cash related to Company
issued letters of credit in connection with leases. These amounts are held in separate bank accounts to support letter of credit agreements for certain of its
leases.
111
Concentration of credit risk and other risks and uncertainties
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities.
The Company maintains bank deposits in federally insured financial institutions and these deposits may exceed federally insured limits. The Company is
exposed to credit risk in the event of a default by the financial institutions holding its bank deposits and issuers of its investments. The Company’s
investment policy limits investments to money market funds, certain types of debt securities issued by the U.S. government and its agencies, certificates of
deposit, corporate debt and commercial paper, and places restrictions on the credit ratings, maturities and concentration by type and issuer. The Company
has not experienced any significant losses on its deposits of cash and cash equivalents or investments.
Fair value measurement
The carrying amounts of the Company’s certain financial instruments, including cash equivalents, accounts payable and accrued expenses and other
current liabilities approximate fair value due to their relatively short maturities and market interest rates, if applicable. For more information, refer to Note
4 regarding the fair value of the Company’s available-for-sale securities.
Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment
associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price
that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of
unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value
measurements as follows:
Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include
quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not
active; and
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets, which is generally three to five years. Leasehold improvements are amortized using the straight-line method
over the shorter of the assets’ estimated useful lives or the remaining term of the lease. Maintenance and repairs are charged to operations as incurred.
Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheet and the resulting gain or
loss is reflected in the consolidated statement of operations.
Useful lives of property and equipment are as follows:
Property and equipment
Estimated useful life
Laboratory equipment
4-5 years
Leasehold improvements
Lesser of estimated useful life or remaining lease term
Computer equipment and software
3 years
Furniture and fixtures
5 years
112
Leases
The Company determines if an arrangement is, or contains, a lease at inception and then classifies the lease as operating or financing based on the
underlying terms and conditions of the contract. Leases with terms greater than one year are initially recognized on the balance sheet as right-of-use assets
and lease liabilities based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not
readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the rate incurred to borrow, on a collateralized basis, an
amount equal to the lease payments over a similar term and in a similar economic environment of the applicable country or region. Variable lease payments
are excluded from the right-of-use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is
incurred. Leases with a term of 12 months or less are not recognized on the consolidated balance sheets.
Impairment of long-lived assets
Long-lived assets are reviewed for indications of possible impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset or asset group may not be recoverable. Recoverability is measured by comparison of the carrying amounts of the asset group to the
future undiscounted cash flows attributable to these assets. An impairment loss is recognized to the extent an asset group is not recoverable, and the
carrying amount exceeds the projected discounted future cash flows arising from these assets. There were no impairments of long-lived assets for any of the
periods presented.
Acquired intangible assets
Indefinite-lived intangible assets represent the estimated fair value assigned to in-process research and development (IPR&D) acquired in a business
combination. The Company reviews indefinite-lived intangible assets for impairment at least annually or more frequently if events or changes in
circumstances indicate that the carrying value of the assets might not be recoverable. If the carrying value of an indefinite-lived intangible asset exceeds its
fair value, then it is written down to its adjusted fair value. As of December 31, 2024, there have been no such impairments. For IPR&D, if a product
candidate derived from the indefinite-lived intangible asset is developed and commercialized, the useful life will be determined, and the carrying value will
be amortized prospectively over that estimated useful life. Alternatively, if a product candidate is abandoned, the carrying value of the intangible asset will
be charged to research and development expenses in the consolidated statements of operations and comprehensive loss.
Finite-lived intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair
value at the acquisition date and are carried at cost less accumulated amortization and impairment. Amortization is computed using the straight-line method
over the estimated useful lives of the respective finite-lived intangible assets and is included in research and development expenses in the consolidated
statement of operations. Intangible assets are reviewed for impairment at least annually or more frequently if indicators of potential impairment exist. As of
December 31, 2024, no such impairment has been recorded.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and intangible assets acquired in a business
combination. The Company reviews goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that the
carrying value of goodwill may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first assessing the qualitative factors to
determine whether it is more likely than not that the fair value of the Company’s single reporting unit is less than its carrying amount. Qualitative indicators
assessed include consideration of macroeconomic, industry and market conditions, the Company’s overall financial performance and personnel or strategy
changes. Based on the qualitative assessment, if it is determined that it is more likely than not that its fair value is less than its carrying amount, the fair
value of the Company’s single reporting unit is compared to its carrying value. Any excess of the goodwill carrying amount over the fair value is
recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. As of December 31, 2024, no goodwill impairment has
been identified.
Warrants
Warrants assumed as part of the EQRx transaction as described in Note 3 contain provisions that require them to be classified as derivative liabilities
in accordance with Accounting Standards Codification Topic 815, Derivatives and Hedging (ASC 815). Accordingly, at the end of each reporting period,
changes in fair value during the period are recognized as a change in fair value of warrant liabilities within the consolidated statements of operations and
comprehensive loss. The Company adjusts the warrant liabilities for changes in the fair value until the earlier of (a) the exercise or expiration of the
warrants or (b) the redemption of the warrants, at which time the warrants will be reclassified to additional paid-in capital.
113
Derivative warrant liabilities are classified as noncurrent liabilities, as their liquidation is not reasonably expected to require the use of current assets
or require the creation of current liabilities.
Revenue recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company
determines are within the scope of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606), the Company
performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company
satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the
goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service
is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or
as) the performance obligation is satisfied.
The Company enters into collaboration agreements under which it may obtain upfront license fees, research and development funding, and
development, regulatory and commercial milestone payments and royalty payments. The Company’s performance obligations under these arrangements
may include licenses of intellectual property, sales and distribution rights, research and development services, delivery of manufactured product and/or
participation on joint steering committees.
Licenses of intellectual property: If the license to the Company’s intellectual property is determined to be distinct from the other performance
obligations identified in the arrangement, the Company recognizes revenue from upfront license fees allocated to the license when the license is transferred
to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes
judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or
at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-
refundable, upfront fees. The Company evaluates the measure of proportional performance each reporting period and, if necessary, adjusts the measure of
performance and related revenue recognition.
Research, development and regulatory milestone payments: At the inception of each arrangement that includes research, development, or regulatory
milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in
the transaction price. The Company uses the most likely amount method for research, development and regulatory milestone payments. Under the most
likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. If it is probable that a significant
revenue reversal would not occur, the associated milestone value is included in the transaction price.
Sales-based milestones and royalties: For arrangements that include sales-based milestone or royalty payments based on the level of sales, and in
which the license is deemed to be the predominant item to which the sales-based milestone or royalties relate to, the Company recognizes revenue in the
period in which the sales-based milestone is achieved and in the period in which the sales associated with the royalty occur. To date, the Company has not
recognized any sales-based milestone or royalty revenue resulting from its collaboration arrangements.
Deferred revenue represents amounts received by the Company for which the related revenues have not been recognized because one or more of the
revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount to be recognized within one year from the
balance sheet date based on the estimated performance period of the underlying performance obligation. The noncurrent portion of deferred revenue
represents amounts to be recognized after one year through the end of the performance period of the performance obligation.
Research and development expenditures
Research and development expenses consist of costs incurred for the Company’s own and for collaborative research and development activities.
Research and development costs are expensed as incurred. Research and development costs consist of salaries and benefits, including associated stock-
based compensation, and laboratory supplies and facility costs, as well as external costs paid to other entities that conduct certain research and development
activities on the Company’s behalf. The Company estimates preclinical studies and clinical trial expenses based on the services performed pursuant to
contracts with research institutions, contract research organizations and clinical manufacturing organizations that conduct and manage preclinical studies
and clinical trials on the Company’s behalf based on actual time and expenses incurred by them. Further, the Company accrues expenses related to clinical
114
trials based on the level of patient activity according to the related agreement. The Company monitors patient enrollment levels and related activity to the
extent reasonably possible and adjusts estimates accordingly.
Stock-based compensation
The Company measures its stock-based awards granted to employees and directors based on the estimated fair values of the awards and recognizes
the compensation on a straight-line basis over the requisite service period. The fair value of options issued under the employee stock purchase plan is
calculated using the Black-Scholes option-pricing model. Restricted stock units are valued based on the closing price of the Company’s common stock on
the date of grant.
Comprehensive loss
For the years ended December 31, 2024, 2023 and 2022, other comprehensive income (loss) included net unrealized gains or losses on marketable
securities.
Income taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are
expected to affect taxable income. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation
allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical
operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation
allowance.
The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant
taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or
measurement are reflected in the period in which a change in facts occurs. The Company’s policy is to recognize interest and penalties related to the
underpayment of income taxes as a component of interest expense.
Net loss per share attributable to common stockholders
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the
weighted-average number of shares of common stock (including pre-funded warrants) outstanding during the period, without consideration for potentially
dilutive securities. Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for the purposes of computing
net loss per share because the shares may be issued for little or no consideration, are fully vested and are exercisable without being subject to any
conditions after the original issuance date. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable
to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For purposes of
the diluted net loss per share calculation, redeemable convertible preferred stock, stock options, common stock subject to repurchase related to unvested
restricted stock awards and early exercise of stock options are considered to be potentially dilutive securities. Basic and diluted net loss attributable to
common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible
preferred stock is considered a participating security because it participates in dividends with common stock. The Company also considers the shares issued
upon the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend
rights in the event a dividend is paid on common stock. The holders of all series of redeemable convertible preferred stock and the holders of early
exercised shares subject to repurchase do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to
common stockholders. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per
share for those periods.
Segment reporting
The Company determines its operating segments based on how the chief operating decision maker (CODM) views and analyzes the segment’s
operations and performance and allocates resources. The President and Chief Executive Officer is the CODM. The CODM utilizes net loss as the measure
of segment profit or loss. The Company has one operating and reportable segment. The Company’s CODM manages the Company’s operations on a
consolidated basis for the purposes of allocating resources and evaluating financial performance. The CODM assesses performance for and decides how to
allocate resources based on the company’s cash and investment balance, periodic changes in cash and investments, and net loss, all of which are reported
on the company’s consolidated
115
balance sheets, statements of operations and/or statements of cash flows. The measure of segment assets is reported on the consolidated balance sheets as
total consolidated assets. All of the Company’s long-lived assets are located in the United States.
In addition to the significant expense categories included within consolidated net loss presented on the Company’s Consolidated Statements of
Operations, see below for disaggregated amounts that comprise research and development expenses:
Years Ended December 31,
2024
2023
2022
(in thousands)
Third-party research and development expenses
$
368,101
$
262,605 $
153,944
Salaries and other employee-related expenses
113,475
81,658
49,449
Stock-based compensation expense
50,973
34,126
18,113
Amortization of intangible assets
1,069
1,068
1,069
Other research and development costs
58,607
43,687
30,498
Total research and development expense
$
592,225
$
423,144 $
253,073
(a) Third-party research and development expenses are comprised primarily of external costs incurred under agreements with third-party contract
organizations, investigative clinical trial sites that conduct research and development activities on the Company’s behalf and consultants; costs related to
the production of preclinical, clinical and pre-launch materials, including fees paid to contract manufacturers; and laboratory and vendor expenses related to
the execution of discovery programs, preclinical and clinical trials.
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), under its ASC or other
standard setting bodies, and adopted by the Company as of the specified effective date.
Recently adopted accounting pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (ASU
2023-07). ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
The guidance is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years, beginning
after December 15, 2024. Early application is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial
statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense
categories identified and disclosed in the period of adoption. The Company adopted the standard for the year ended December 31, 2024 with disclosures
included in Note 2, Summary of significant accounting policies.
Recently announced accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (ASU 2023-09). ASU
2023-09 relates to rate reconciliation and income taxes paid disclosures. The guidance is effective for public business entities for fiscal years beginning
after December 15, 2024. Early application is permitted. The guidance is to be applied on a prospective basis. The Company is currently evaluating the
impact of the standard on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE). The new standard requires disclosures
about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling
expenses. The guidance is effective for public business entities for fiscal years (clarified as annual reporting periods by ASU 2025-01, Income Statement—
Reporting Comprehensive Income—Expense Disaggregation Disclosures Subtopic 220-40 issued in January 2025) beginning after December 15, 2026,
and interim periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied prospectively, with the option for
retrospective application. The Company is currently evaluating the impact of the standard on its consolidated financial statements.
(a)
116
3. Acquisition
On November 9, 2023 (the Closing Date), the Company completed the acquisition of EQRx (the EQRx Acquisition). Pursuant to the Agreement and
Plan of Merger, dated as of July 31, 2023 (the Merger Agreement), EQRx, LLC survived as a wholly owned subsidiary of the Company.
On the Closing Date, each share of EQRx common stock issued and outstanding immediately prior to the completion of the EQRx Acquisition was
converted into the right to receive 0.1112 shares of the Company’s common stock. Outstanding stock options, restricted stock units and restricted stock
awards of EQRx were also converted into the Company’s common stock, subject to the terms of the Merger Agreement. The Company issued 54.8 million
shares of the Company’s common stock and paid $4.0 million in taxes to satisfy statutory income tax withholding obligations in conjunction with the
EQRx Acquisition.
The EQRx Acquisition provided the Company with additional financing through the acquisition of EQRx’s cash, cash equivalents, and marketable
securities, which comprised the majority of the net assets acquired from EQRx. As the Company primarily acquired these monetary assets, the EQRx
Acquisition was accounted for as a capital-raising transaction with an asset acquisition component. EQRx does not meet the definition of a business under
Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (ASC 805), due to the fair value of EQRx,
excluding cash and cash equivalents, as of the date of the EQRx Acquisition, being concentrated primarily in one asset class, marketable securities.
Under the asset acquisition method of accounting, the purchase consideration was allocated and recorded by the Company on a fair value basis to
the net assets acquired on the Closing Date. Any excess fair value of net assets of EQRx over the cost of the acquisition following determination of the
actual purchase consideration is allocated to EQRx’s qualifying assets under ASC 805. As there were no qualifying assets acquired the excess fair value of
net assets under ASC 805 was recorded to equity, as a capital-raising transaction. Because EQRx had wound down the majority of its research and
development activities and its operations by the time of the Closing Date, the net assets being acquired are primarily comprised of cash and cash
equivalents and marketable securities.
The following table reflects the consideration transferred by the Company:
Amount
(in thousands)
Fair value of shares of combined company to be owned by EQRx
stockholders (1)
$
1,096,826
Less: Fair value of EQRx equity awards converting to Revolution
Medicines common stock attributable to post-combination service
(11,150)
Taxes paid by Revolution Medicines on behalf of EQRx to satisfy
statutory income tax withholding obligations
4,026
Fair value of warrants
6,907
Fair value of contingent earn-out shares
490
Purchase price
$
1,097,099
(1) Represents the fair value of approximately 54.8 million shares of Revolution Medicines common stock issued, calculated using the per share price of
Revolution Medicines common stock of $20.02 as of November 9, 2023.
The following table summarizes the fair value of the assets acquired and liabilities assumed as of the Closing Date:
Amount
(in thousands)
Cash and cash equivalents
$
860,918
Marketable securities
313,878
Prepaid expenses and other current assets
12,084
Restricted cash
633
Other noncurrent assets
2,912
Accounts payable
(6,893)
Accrued expenses and other current liabilities
(30,506)
Net assets acquired
$
1,153,026
117
The excess fair value of net assets acquired over the purchase price was $55.9 million and was recorded to additional paid-in capital.
The following table calculates the excess of fair value of assets acquired over the purchase consideration under asset acquisition accounting:
Amount
(in thousands)
Purchase price
$
1,097,099
Less: net assets acquired
(1,153,026)
Remaining excess fair value of net assets acquired over the purchase
price
$
(55,927)
Transaction costs of $20.7 million incurred by the Company to complete the EQRx Acquisition were accounted for as a direct reduction to the
Company’s additional paid-in capital, as these costs were primarily incurred to issue Revolution Medicines common stock as part of the capital-raising
transaction.
In connection with the EQRx Acquisition, certain unvested outstanding stock options, restricted stock units and restricted stock awards of EQRx
were accelerated and converted into the Company’s common stock. As a result, the fair-value of the unvested portion of the accelerated EQRx equity
awards of $11.2 million was recognized as a post-combination expense and included in stock-based compensation expense for the year ended December
31, 2023.
In connection with the EQRx Acquisition, as of the Closing Date, all public warrants of EQRx that were outstanding and unexercised immediately
prior to the Closing Date were converted into 11,039,957 publicly traded warrants (Public Warrants) and 8,693,333 private placement warrants of the
Company (Private Warrants and, together with the Public Warrants, the Warrants). Each Warrant entitles the holder to purchase 0.1112 shares of the
Company’s common stock, at an exercise price of $11.50 per such fractional share. The fair value of the Warrants on the Closing Date of $6.9 million was
included in the purchase price. The Warrants expire in December 2026. The Public Warrants and Private Warrants met liability classification requirements
because the Warrants contain provisions whereby adjustments to the settlement amount of the Warrants are based on a variable that is not an input to the
fair value of a “fix-for-fixed” option and the existence of the potential for net cash settlement for the Warrant holders in the event of a tender offer. In
addition, the Private Warrants are potentially subject to a different settlement amount depending upon the holder of the Private Warrants, which precludes
them from being considered indexed to the entity’s own stock. Therefore, the Warrants are classified as liabilities.
Prior to the EQRx Acquisition, holders of rights to EQRx earn-out shares held in escrow were entitled to receive additional shares of EQRx common
stock for no consideration upon the occurrence of certain stock price-based triggering events (the earn-out shares). The earn-out shares were converted in
the same manner as all other shares of EQRx common stock under the Merger Agreement and holders of rights to earn-out shares were entitled to receive
up to 5,560,000 shares of common stock of the Company, subject to the triggering events. No triggering events occurred and the rights to the earn-out
shares expired on December 17, 2024.
118
4. Fair value measurements
The following table presents information about the Company’s financial assets that are measured at fair value and indicates the fair value hierarchy
of the valuation:
December 31, 2024
Total
Level 1
Level 2
Level 3
(in thousands)
Assets:
Money market funds
$
409,233 $
409,233 $
— $
—
Commercial paper
245,658
—
245,658
—
Certificates of deposit
9,048
—
9,048
—
U.S. government and agency securities
1,051,754
—
1,051,754
—
Corporate bonds
571,654
—
571,654
—
Total
$
2,287,347 $
409,233 $
1,878,114 $
—
Liabilities:
Warrant liabilities
3,189
1,784
1,405
—
Total
$
3,189 $
1,784 $
1,405 $
—
December 31, 2023
Total
Level 1
Level 2
Level 3
(in thousands)
Assets:
Money market funds
$
288,757 $
288,757 $
— $
—
Commercial paper
692,352
—
692,352
—
U.S. government and agency securities
786,406
—
786,406
—
Corporate bonds
85,218
—
85,218
—
Total
$
1,852,733 $
288,757 $
1,563,976 $
—
Liabilities:
Contingent earn-out liability
1,000
—
—
1,000
Warrant liabilities
6,512
3,643
2,869
—
Total
$
7,512 $
3,643 $
2,869 $
1,000
Money market funds are measured at fair value on a recurring basis using quoted prices. U.S. government debt securities, government agency bonds,
certificates of deposit, commercial paper and corporate bonds are measured at fair value, which is derived from independent pricing sources based on
quoted prices in active markets for similar securities.
There were no transfers between Levels 1, 2 or 3 for any of the periods presented.
The fair value of the warrant liabilities was based on observable listed prices for such warrants. The fair value of the public warrants is categorized
as Level 1. The fair value of the private warrants is categorized as Level 2 as they are equivalent to the public warrants as they have substantially the same
terms; however, they are not actively traded.
The contingent earn-out liability accounted for under ASC 815 is categorized as Level 3 fair value measurements within the fair value hierarchy
because the Company estimates projections utilizing unobservable inputs.
119
5. Available-for-sale securities
The following tables summarize the amortized cost and estimated fair value of the Company’s available-for-sale marketable securities and cash
equivalents and the gross unrealized gains and losses:
December 31, 2024
Gross
Gross
Amortized
unrealized
unrealized
Estimated
cost
gain
loss
fair value
(in thousands)
Marketable securities:
Commercial paper
$
158,838 $
72 $
(17)
$
158,893
Certificates of deposit
9,039
10
(1)
9,048
U.S. government and agency securities
1,011,019
1,123
(382)
1,011,760
Corporate bonds
566,008
657
(131)
566,534
Total marketable securities
1,744,904
1,862
(531)
1,746,235
Cash equivalents:
Money market funds
409,233
—
—
409,233
Commercial paper
86,778
—
(13)
86,765
U.S. government and agency securities
39,991
4
(1)
39,994
Corporate bonds
5,120
—
—
5,120
Total cash equivalents
541,122
4
(14) —
541,112
Total available-for-sale securities
$
2,286,026 $
1,866 $
(545)
$
2,287,347
December 31, 2023
Gross
Gross
Amortized
unrealized
unrealized
Estimated
cost
gain
loss
fair value
(in thousands)
Marketable securities:
Commercial paper
$
460,979 $
108 $
(100)
$
460,987
U.S. government and agency securities
610,188
769
(355)
610,602
Corporate bonds
85,030
189
(1)
85,218
Total marketable securities
1,156,197
1,066
(456)
1,156,807
Cash equivalents:
Money market funds
288,757
—
—
288,757
Commercial paper
231,380
33
(48)
231,365
U.S. government and agency securities
175,855
3
(54)
175,804
Total cash equivalents
695,992
36
(102)
695,926
Total available-for-sale securities
$
1,852,189 $
1,102 $
(558)
$
1,852,733
The amortized cost and estimated fair value of the Company’s available-for-sale securities by contractual maturity are summarized below as of
December 31, 2024:
December 31, 2024
Gross
Gross
Amortized
unrealized
unrealized
Estimated
cost
gain
loss
fair value
(in thousands)
Mature in one year or less
$
1,908,612 $
1,805 $
(162)
$
1,910,255
Mature after one year through two years
377,414
61
(383)
377,092
Total available-for-sale securities
$
2,286,026 $
1,866 $
(545)
$
2,287,347
120
6. Balance sheet components
Property and equipment, net
Property and equipment, net consists of the following:
December 31,
2024
2023
(in thousands)
Laboratory equipment
$
25,192 $
21,505
Leasehold improvements
14,280
11,952
Computer equipment and software
5,046
5,806
Furniture and fixtures
1,200
783
Construction in progress
394
513
46,112
40,559
Less: accumulated depreciation and amortization
(21,823)
(17,694)
Property and equipment, net
$
24,289 $
22,865
Depreciation expense for property and equipment amounted to $6.2 million, $5.0 million and $4.0 million for the years ended December 31, 2024,
2023 and 2022, respectively.
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following:
December 31,
2024
2023
(in thousands)
Accrued compensation
$
30,774 $
23,613
Accrued research and development
63,635
45,003
Accrued professional services
1,623
2,182
Other
583
3,896
Total accrued expenses and other current liabilities
$
96,615 $
74,694
7. Intangible assets and goodwill
Intangible assets, net
Intangible assets, net consist of the following as of December 31, 2024:
Gross value
Accumulated
amortization
Net book
value
Weighted-
average
remaining
useful life
(in thousands)
(in years)
In-process research and development — RAS Programs
$
55,800 $
— $
55,800
n/a
Developed technology — tri-complex platform
7,480
(6,610)
870
0.9
Total
$
63,280 $
(6,610) $
56,670
Amortization expense was $1.1 million for each of the years ended December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2024, future amortization expense is as follows:
Amount
(in thousands)
2025
$
870
Total
$
870
121
Intangible assets, net consist of the following as of December 31, 2023:
Gross value
Accumulated
amortization
Net book
value
Weighted-
average
remaining
useful life
(in thousands)
(in years)
In-process research and development — RAS Programs
$
55,800 $
— $
55,800
n/a
Developed technology — tri-complex platform
7,480
(5,541)
1,939
1.9
Total
$
63,280 $
(5,541) $
57,739
Goodwill
The following summarizes the change in the carrying value of goodwill for the year ended December 31, 2024:
Amount
(in thousands)
Balance at December 31, 2023
$
14,608
Adjustment
—
Balance at December 31, 2024
$
14,608
No impairment has been recognized as of December 31, 2024. Goodwill recorded is not deductible for income tax purposes.
8. Commitments and contingencies
Leases
In January 2015, as amended in September 2016, the Company entered into an operating lease for approximately 42,000 square feet of office and
laboratory space located at 700 Saginaw Drive, Redwood City, California (the 700 Building), with a term through April 2023. In April 2020, the Company
amended the lease to lease an additional 19,000 square feet of office, laboratory and research and development space located at 300 Saginaw Drive,
Redwood City, California (the 300 Building), and to extend the lease term through December 2030. In November 2021, the Company amended the lease to
lease an additional 41,000 square feet of office, laboratory and research and development space located at 800 Saginaw Drive, Redwood City, California
(the 800 Building), and to extend the lease term through November 2033. In March 2023, the Company amended the lease to lease an additional
approximately 40,000 square feet of office, laboratory and research and development space located at 900 Saginaw Drive, Redwood City, California (the
900 Building), and to extend the lease term through December 31, 2035. The Company has the option to extend the lease for an additional ten years after
December 31, 2035. The Company obtained possession of the 900 Building in October 2023. In July 2024, the Company amended its Redwood City lease
to lease an additional approximately 43,000 square feet of office, laboratory and research and development space located at 500 Saginaw Drive, Redwood
City, California (the 500 Building). The Company has the option to extend the lease for an additional ten years after the first anniversary of the lease
commencement date of the 500 Building. In November 2024, the Company amended its Redwood City lease to lease an additional approximately 46,961
square feet of office, laboratory and research and development space located at 600 Saginaw Drive, Redwood City, California (the 600 Building). The
Company has the option to extend the lease for an additional ten years after the first anniversary of the lease commencement date of the 600 Building.
Additionally, in November 2024, the Company also entered into a sublease agreement pursuant to which approximately 23,481 square feet of office space
located on the first floor of the 600 Building was subleased. The term of the sublease is through October 2027, with no options to extend. The sublease is
accounted for as an operating lease.
The Company maintains letters of credit for the benefit of the landlord which are classified as restricted cash in the consolidated balance sheets.
Restricted cash related to letters of credit due to the landlord was $3.7 million and $2.4 million as of December 31, 2024 and December 31, 2023,
respectively.
Through December 31, 2024, the landlord had provided the Company with $16.3 million in tenant improvement allowances, which were recognized
as lease incentives. The lease incentives are being amortized as an offset to rent expense over the lease term in the consolidated statements of operations
and comprehensive loss.
122
Upon the execution of the lease amendment in March 2023, which was deemed to be a lease modification, the Company re-evaluated the
assumptions used during the lease amendment in November 2021. The Company determined the amendment consists of two separate contracts under ASC
842. One contract is related to a new right-of-use asset for the 900 Building, which is being accounted for as an operating lease, and the other is related to
the modification of the lease term, as amended in November 2021, for the 700 Building, 300 Building and 800 Building. As a result, the Company recorded
a right-of-use asset and a lease liability of $25.0 million for the 900 Building and an aggregate increase of $0.3 million to the right-of-use assets and lease
liabilities for the 700 Building, 300 Building and 800 Building upon execution of the lease amendment. The Company is recognizing rent expense for the
buildings on a straight-line basis through the remaining extended term of the lease.
Upon the execution of the lease in July 2024, the Company determined that the contract is related to a new right-of-use asset for the 500 Building,
which is being accounted for as an operating lease under ASC 842. Upon obtaining possession of the building in October 2024, the Company recorded a
right-of-use asset of $18.2 million, a lease liability of $21.8 million and a lease receivable of $3.6 million for the 500 Building. The Company is
recognizing rent expense for the buildings on a straight-line basis through the term of the lease.
Upon the execution of the lease in November 2024, the Company determined that the contract is related to a new right-of-use asset for the 600
Building, which is being accounted for as an operating lease under ASC 842. The Company recorded a right-of-use asset and a lease liability of $26.3
million for the 600 Building. The Company is recognizing rent expense for the buildings on a straight-line basis through the remaining extended term of the
lease.
The balance sheet classification of the Company’s operating lease liabilities was as follows:
December 31,
2024
(in thousands)
Operating lease liabilities:
Operating lease liability – current
$
12,872
Operating lease liability – noncurrent
122,971
Total operating lease liabilities
$
135,843
The components of lease costs for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
December 31,
2024
2023
2022
Operating lease cost
$
12,166 $
8,485 $
8,854
Less: Sublease income
(561)
(302)
(2,476)
Total operating lease cost, net
$
11,605 $
8,183 $
6,378
(1) Net lease cost does not include short-term lease and variable lease costs, which were immaterial.
As of December 31, 2024, the maturities of the Company’s operating lease liabilities were as follows (in thousands):
2025
$
18,073
2026
17,048
2027
17,554
2028
17,695
2029
21,703
Thereafter
124,161
Total undiscounted lease payments
$
216,234
Less: Imputed interest
(73,731)
Less: Lease receivable
(6,660)
Total operating lease liabilities
$
135,843
(1)
123
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the
present value of lease payments, the Company uses its incremental borrowing rate. The weighted-average discount rate used to determine the operating
lease liability was 7.66%. As of December 31, 2024 and 2023, the weighted-average remaining lease term is 11.0 years and 12.0 years, respectively.
Legal matters
From time to time, the Company may become involved in litigation or other legal proceedings arising from the ordinary course of its business
activities. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future
litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and
settlement costs, diversion of management resources, and other factors.
On December 9, 2024, Nemeth v. Casdin, et al., Case No. 2024-1268-KSJM (Del. Ch.), was filed in the Court of Chancery of the State of Delaware
(the Complaint) arising from CM Life Sciences III., Inc.’s (CMLS III) December 17, 2021 merger with EQRx., Inc. (Legacy EQRx) (the Merger). The
Complaint was filed by former stockholders of CMLS III and brings claims for breach of fiduciary duty and unjust enrichment against members of CMLS
III’s board of directors, CMLS III’s officers, and CMLS III’s sponsor in connection with the Merger. The Complaint also brings claims for aiding and
abetting breaches of fiduciary duties against certain investment firms involved with the merger process, the Company, solely as successor-in-interest to
EQRx, and Legacy EQRx’s former Executive Chairman and CEO, Alexis Borisy, who is also on the Company’s board of directors. Defendants’ response
to the Complaint is due on February 28, 2025.
At this juncture, the Company does not believe this action will have a material adverse impact on its operations or financial position. The Company
is currently unable to predict the outcome of these lawsuits and therefore cannot determine the likelihood of loss, if any, nor estimate a range of possible
loss.
Indemnification
The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company
indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with
any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these
indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the
Company could be required to make under these arrangements is not determinable. The Company has not incurred costs to defend lawsuits or settle claims
related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is minimal.
Other
The Company enters into agreements in the ordinary course of business with contract research organizations for clinical trials, contract
manufacturing organizations to provide clinical trial materials and with vendors for preclinical studies and other services and products for operating
purposes which are generally cancelable at any time by the Company upon 30 to 90 days prior written notice.
9. Sanofi collaboration agreement
In June 2018, the Company entered into a collaborative research, development and commercialization agreement (the Sanofi Agreement) with
Aventis, Inc. (an affiliate of Sanofi) to research and develop SHP2 inhibitors, including RMC-4630, for any indications. The Sanofi Agreement was
assigned to Genzyme Corporation, a Sanofi affiliate, in December 2018. For the purposes of this discussion, the Company refers to Genzyme Corporation
as Sanofi. The Sanofi Agreement was terminated in June 2023.
Pursuant to the Sanofi Agreement, the Company granted Sanofi a worldwide, exclusive, sublicensable (subject to the Company’s consent in certain
circumstances) license under certain of the Company’s patents and know-how to research, develop, manufacture, use, sell, offer for sale, import and
otherwise commercialize SHP2 inhibitors, including RMC-4630, for any and all uses, subject to the Company’s exercise of rights and performance of
obligations under the Sanofi Agreement.
Under the Sanofi Agreement, the Company had primary responsibility for early clinical development of RMC-4630 pursuant to an approved
development plan. Sanofi was responsible for reimbursing the Company for all internal and external costs and expenses to perform its activities under
approved development plans, except for costs and expenses related to the RMC-4630-03 study, for which Sanofi reimbursed the Company 50% of the costs
and expenses.
124
Pursuant to the Sanofi Agreement, the Company received an upfront payment of $50 million from Sanofi in July 2018. The Sanofi Agreement
included obligations for Sanofi to make certain milestone payments and royalty payments, all of which expired on termination of the Sanofi Agreement.
Upon termination of the Sanofi Agreement, the licenses granted to Sanofi thereunder became fully paid-up, royalty-free, perpetual and irrevocable
and all rights and obligations of Sanofi under the Sanofi Agreement reverted to the Company.
During the years ended December 31, 2024, 2023 and 2022, the Company recognized zero, $11.6 million and $35.4 million of collaboration revenue
associated with this agreement, respectively.
10. Common stock
As of December 31, 2024 and 2023, the Company’s certificate of incorporation authorized the Company to issue 300,000,000 shares of common
stock, at a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive
dividends whenever funds are legally available and when declared by the Board of Directors. As of December 31, 2024, no dividends have been declared to
date.
The Company evaluated the pre-funded warrants issued in conjunction with the December 2024 underwritten public offering and concluded that
they met the criteria to be classified as equity within additional paid-in-capital. The pre-funded warrants have been classified as equity because they (1) are
freestanding financial instruments that are legally detachable and separately exercisable from the common stock, (2) are immediately exercisable, (3) do not
embody an obligation for the Company to repurchase its shares, (4) permit the holder to receive a fixed number of shares of common stock upon exercise,
(5) are indexed to the Company’s common stock and (6) meet the equity classification criteria. All of the shares underlying the pre-funded warrants have
been included in the weighted-average number of shares of common stock used to calculate net loss per share attributable to common stockholders because
the shares may be issued for little or no consideration, are fully vested and are exercisable after the original issuance date of the pre-funded warrants.
The Company has reserved shares of common stock for future issuance as follows:
December 31,
December 31,
2024
2023
Outstanding options to purchase common stock
13,985,538
11,083,349
Unvested restricted stock units of common stock
2,850,112
2,161,267
Available for future issuance under the 2020 Incentive Award Plan
8,945,644
6,241,188
Available for issuance under the 2020 Employee Stock Purchase Plan
3,775,682
2,394,407
Pre-funded warrants issued and outstanding
2,173,917
—
Total common stock reserved for future issuance
31,730,893
21,880,211
11. Stock-based compensation
2020 Incentive Award Plan
In February 2020, the Company adopted the 2020 Equity Incentive Plan (the 2020 Plan). The 2020 Plan became effective on February 11, 2020. The
2020 Plan provides for a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted
stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash based awards. Under the 2020
Plan, the Company generally grants stock-based awards with service-based vesting conditions only. Options and restricted stock unit awards granted
typically vest over a four-year period, but may be granted with different vesting terms.
Following the effectiveness of the 2020 Plan, the Company ceased making grants under the 2014 Equity Incentive Plan (the 2014 Plan). However,
the 2014 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted
under the 2014 Plan that are forfeited or lapse unexercised and which following the effective date of the 2020 Plan were not issued under the 2014 Plan are
available for issuance under the 2020 Plan.
125
2020 Employee Stock Purchase Plan
In February 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the ESPP). Under the ESPP, employees have the ability to
purchase shares of the Company’s common stock through payroll deductions at a discount during a series of offering periods of 24 months, each comprised
of four six-month purchase periods. The purchase price will be the lower of 85% of the closing trading price per share of the Company’s common stock on
the first day of an offering period in which an employee is enrolled or 85% of the closing trading price per share on the purchase date, which will occur on
the last trading day of each purchase period.
As of December 31, 2024, there have been 265,470 shares of common stock purchased under the ESPP. As of December 31, 2024, a total of
3,775,682 shares of common stock were available for future issuance under the ESPP. As of December 31, 2024, there was $4.9 million of unrecognized
compensation cost related to the ESPP.
Stock options
The following summarizes option activity under both the 2020 Plan and the 2014 Plan:
Number of
Shares
underlying
options
Weighted-
average
exercise price
Weighted-
average
remaining
contractual
term
Aggregate
intrinsic
value
(in years)
(in thousands)
Balance, December 31, 2023
11,083,349 $
19.64
7.50 $
115,009
Options granted
4,170,607
34.23
Options exercised
(927,275)
13.30
Options cancelled and forfeited
(341,143)
26.46
Balance, December 31, 2024
13,985,538 $
24.25
7.36 $
276,335
Options vested and exercisable as of December 31, 2024
7,629,736 $
19.04
6.22 $
188,535
The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise
price of the options and the estimated fair value of the Company’s common stock by the Board of Directors. The intrinsic value of the options exercised for
the years December 31, 2024, 2023 and 2022 was $29.4 million, $10.7 million and $3.8 million, respectively.
During the years ended December 31, 2024, 2023 and 2022, the weighted-average grant-date fair value of options granted was $22.07, $17.82 and
$12.33 per share, respectively. As of December 31, 2024, there was $118.8 million of unrecognized stock-based compensation expense related to unvested
stock options that is expected to be recognized over a weighted-average period of 2.65 years.
The fair value of employee and director stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the
following assumptions:
Year Ended December 31,
2024
2023
2022
Expected term (years)
6
6
6
Expected volatility
67%-68%
73-75%
70-73%
Risk-free interest rate
3.6%-4.6%
3.5%-4.7%
1.5%-4.2%
Dividend yield
0%
0%
0%
The Black-Scholes model assumptions that determine the fair value of stock-based awards include:
Expected term—The expected term is calculated using the simplified method, which is available where there is insufficient historical data about
exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for
each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration
date is used as the expected term under this method.
Expected volatility—Given the Company does not have sufficient trading history for its common stock, the expected volatility was estimated based
on the average volatility of the Company and comparable publicly traded biotechnology companies over a period
126
equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle or area of
specialty.
Risk-free interest rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods
corresponding with the expected term of option.
Expected dividend—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock.
Therefore, the Company used an expected dividend yield of zero.
Restricted stock units
Restricted stock units (RSUs) have been granted to employees and directors. The fair value of an RSU award is based on the Company’s stock price
on the date of grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of the
Company’s common stock. The Company has granted RSUs pursuant to the 2020 plan.
Activity under the 2020 Plan with respect to the Company’s RSUs during the year ended December 31, 2024 was as follows:
Number of
Shares
Weighted-
average
grant date
fair value
per share
Weighted-
average
remaining
contractual
term
Aggregate
intrinsic value
(in years)
(in thousands)
Balance, December 31, 2023
2,161,267 $
25.10
1.56 $
61,985
RSUs granted
1,873,085
34.77
RSUs vested
(1,011,255)
26.48
RSUs forfeited
(172,985)
26.81
Balance, December 31, 2024
2,850,112 $
30.87
1.49 $
124,664
Expected to vest as of December 31, 2024
2,850,112 $
30.87
1.49 $
124,664
The number of RSUs vested includes shares of common stock that the Company withheld to satisfy the minimum statutory tax withholding
requirements. As of December 31, 2024, there was $82.9 million of total unrecognized compensation cost related to RSUs that is expected to be recognized
over a weighted average period of 2.79 years.
The total grant date fair value of RSUs vested for the years ended December 31, 2024, 2023 and 2022 was $26.8 million, $14.3 million and $7.9
million, respectively.
Stock-based compensation expense
Total stock-based compensation expense related to stock options, RSUs and the ESPP by function was as follows:
Year Ended December 31,
2024
2023
2022
(in thousands)
Research and development
$
50,973 $
34,126 $
18,113
General and administrative
28,224
27,646
13,083
Total
$
79,197 $
61,772 $
31,196
In connection with the EQRx Acquisition, certain unvested outstanding stock options, restricted stock units and restricted stock awards of EQRx
were accelerated and converted into the Company’s common stock. The fair-value of the unvested portion of the accelerated EQRx equity awards of $11.2
million (of which $3.7 million was attributed to employees working on research and development projects and $7.5 million working on general and
administration) was recognized as a post-combination expense and included in stock-based compensation expense for the year ended December 31, 2023.
127
12. Income taxes
The Company’s income (loss) before provision for income taxes for the years ended December 31, 2024, 2023 and 2022 consist of the following:
December 31,
2024
2023
2022
(in thousands)
Domestic
$
(600,849) $
(440,683) $
(249,125)
International
(50)
792
—
Income (loss) before provision for income taxes
$
(600,899) $
(439,891) $
(249,125)
The components of the provision for income taxes for the years ended December 31, 2024, 2023 and 2022 consist of the following:
December 31,
2024
2023
2022
(in thousands)
Current:
Federal
$
— $
— $
—
State
27
112
—
Foreign
(42)
212
—
Total current
(15)
324
—
Deferred:
Federal
—
—
—
State
(721)
(3,865)
(420)
Foreign
(17)
17
—
Total deferred
(738)
(3,848)
(420)
Benefit for income taxes
$
(753) $
(3,524) $
(420)
The Company recorded an income tax benefit of $0.8 million, $3.5 million and $0.4 million for the years ended December 31, 2024, 2023 and 2022,
respectively, which reflects a blended state tax rate applied to the indefinite lived intangibles recorded as part of the Company’s acquisition of Warp Drive
Bio in 2018. The Company has incurred net pre-tax losses in the United States for all periods presented. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to the differences between the carrying amounts of existing assets and liabilities in the financial statements and
their respective tax bases using tax rates expected to be in effect during the years in which the basis differences reverse.
The benefit from income taxes differs from the amount expected by applying the federal statutory rate to the loss before taxes as follows:
Year Ended December 31,
2024
2023
2022
Federal statutory income tax rate
21.0%
21.0%
21.0%
State income tax rate, net of federal benefit
5.2%
-2.3%
9.4%
Foreign rate differential
0.0%
0.0%
0.0%
Research tax credits
4.7%
2.7%
3.2%
Change in valuation allowance
-31.1%
-19.8%
-32.4%
Permanent tax differences
0.1%
0.1%
-0.1%
Stock based compensation
-0.2%
-0.8%
-0.9%
Other
0.4%
-0.1%
0.0%
Benefit from income taxes
0.1%
0.8%
0.2%
128
Deferred income tax reflects the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The categories that give rise to significant components of the deferred tax assets are as follows (in
thousands):
December 31,
2024
2023
(in thousands)
Deferred tax assets:
Net operating loss carryforwards
$
226,501 $
147,576
Accruals and reserves
9,951
5,747
Research and development credits
66,001
34,755
Lease liability
37,477
19,628
Stock-based compensation
20,215
9,872
Capitalized research expenses
247,725
185,909
Other
1,140
161
Gross deferred tax assets
609,010
403,648
Less: valuation allowance
(563,912)
(376,762)
Total deferred tax assets
45,098
26,886
Deferred tax liabilities:
Fixed assets and finite-lived intangible assets
(12,671)
(9,683)
Indefinite-lived intangible assets
(2,354)
(3,099)
Right-of-use asset
(32,426)
(17,219)
Gross deferred tax liabilities
(47,451)
(30,001)
Net deferred tax liability
$
(2,353) $
(3,115)
The realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Due to the lack of
earnings history, the net deferred tax assets have been offset by a valuation allowance excluding certain indefinite lived intangibles. The valuation
allowance increased by $187.2 million, $152.6 million and $80.7 million during the years ended December 31, 2024, 2023 and 2022, respectively. The
Company had federal and state net operating loss carryforwards of $151.8 million and $74.7 million, respectively, as presented in the table above, as of
December 31, 2024. The federal net operating loss carryforwards, if not utilized, will expire beginning in 2035, with the exception of $132.2 million in
federal net operating loss carryforwards, which can be carried forward indefinitely. State net operating loss carryforwards, if not utilized, will expire
beginning in 2035. Under the Tax Cuts and Jobs Act (TCJA), federal net operating losses arising after December 31, 2017 do not expire and cannot be
carried back. However, the TCJA limits the amount of federal net operating losses that can be used annually to 80% of taxable income for periods
beginning after December 31, 2017. Existing federal net operating losses arising in years ending on or before December 31, 2017 are not affected by these
provisions.
The Company also had federal and state research and development credit carryforwards of $48.2 million and $17.8 million, respectively, as of
December 31, 2024. The federal research credits will expire beginning in 2034 if not utilized and the state research credits will expire beginning in 2031,
with the exception of $16.8 million in California research credits, which can be carried forward indefinitely. Federal and state tax laws impose significant
restrictions on the utilization of net operating loss carryforwards in the event of a change in ownership of the Company, as defined by Internal Revenue
Code Section 382 (Section 382). The Company performed a study in which it determined that it had experienced changes in ownership in 2014, 2020 and
2023 as defined by Section 382. The Company's deferred tax assets have been reduced by the amount of net operating loss carryforwards expected to
expire due to the limitation. In addition, in the future the Company may experience ownership changes, which may limit the utilization of net operating loss
carryforwards or other tax attributes.
The TCJA amended Internal Revenue Code Section 174 requiring capitalization of specified research and experimental expenditures paid or
incurred in tax years beginning after December 31, 2021 and amortizing over a period of 5 or 15 years. This resulted in a deferred tax asset for capitalized
research expenses in 2024, 2023 and 2022.
129
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
December 31,
2024
2023
2022
(in thousands)
Beginning balance
$
191,407 $
7,602 $
5,143
Changes related to tax positions taken in the prior year
3,226
155,178
(7)
Changes related to tax positions taken in the current year
11,567
28,627
2,466
Ending balance
$
206,200 $
191,407 $
7,602
The Company has unrecognized tax benefits of $198.1 million, $184.2 million and $7.1 million as of December 31, 2024, 2023 and 2022 which
would affect the effective tax rate if recognized; however, recognition would be in the form of a deferred tax attribute which would likely be offset by a
valuation allowance. The Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months. The Company has
recognized no interest or penalties related to uncertain tax positions for the periods presented.
Income tax returns are filed in the United States. The years 2010 through 2024 remain open to examination by the domestic taxing jurisdictions to
which the Company is subject. Net operating losses generated on a tax return basis by the Company for 2010 through 2024 remain open to examination by
the domestic taxing jurisdictions.
13. Net loss per share attributable to common stockholders
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:
Years Ended December 31,
2024
2023
2022
(in thousands, except share and per share data)
Numerator:
Net loss
$
(600,093 ) $
(436,367 ) $
(248,705 )
Redeemable convertible preferred stock dividends-undeclared and cumulative
—
—
—
Net loss attributable to common stockholders
$
(600,093 ) $
(436,367 ) $
(248,705 )
Denominator:
Weighted-average shares outstanding
167,737,672
113,149,869
80,636,570
Less: Weighted-average unvested restricted shares and
shares subject to repurchase
—
—
(10,045 )
Weighted-average shares used to compute net loss per share
attributable to common stockholders, basic and diluted
167,737,672
113,149,869
80,626,525
Net loss per share attributable to common stockholders, basic
and diluted
$
(3.58 ) $
(3.86 ) $
(3.08 )
The shares underlying the pre-funded warrants to purchase shares of the Company’s common stock have been included in the calculation of the
weighted-average number of shares outstanding, basic and diluted, for the years ended December 31, 2024 and 2023.
The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented
due to their anti-dilutive effect:
As of December 31,
2024
2023
2022
Options to purchase common stock
13,985,538
11,083,349
8,164,375
Options early exercised subject to future vesting
—
—
6,918
Unvested restricted stock units of common stock
2,850,112
2,161,267
1,175,032
Expected shares to be purchased under ESPP
400,353
230,651
378,429
Warrants outstanding
2,194,342
2,194,342
—
Earn-out shares
—
973,976
—
Total
19,430,345
16,643,585
9,724,754
130
131
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, our principal executive officer and
principal financial officer, respectively, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended) as of December 31, 2024. Based on the evaluation, our President and Chief Executive Officer and our Chief
Financial Officer have concluded that, as of December 31, 2024, our disclosure controls and procedures were effective.
Management’s annual report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting
principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of our internal control over financial reporting based on the framework set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on our evaluation,
management has concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report which appears herein.
Changes in internal control over financial reporting
There were no changes in our internal controls over financial reporting during the three months ended December 31, 2024 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Inherent limitation on the effectiveness over financial reporting
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of
judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely.
Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide
reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to
continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be
sufficient to provide us with effective internal control over financial reporting.
Item 9B. Other Information.
Rule 10b5-1 Plans
During the three months ended December 31, 2024, the following directors and officers of the Company adopted Rule 10b5-1 trading arrangements
intended to satisfy the affirmative defense of Rule 10b5-1(c) promulgated under the Exchange Act. The details of these arrangements are as follows:
On December 16, 2024, Jack Anders, our Chief Financial Officer, adopted a Rule 10b5-1 trading plan intended to satisfy the affirmative defense conditions
of Rule 10b5-1(c) promulgated under the Exchange Act, which provides for the potential exercise and sale of up to 35,418 shares of our common stock
subject to a stock option held by Mr. Anders. The trading plan will terminate at the earlier of the execution of all trading orders pursuant to the plan and
March 13, 2026.
On December 19, 2024, Mark A. Goldsmith, M.D., Ph.D., our President and Chief Executive Officer and Chair of the Board of Directors, adopted a Rule
10b5-1 trading plan. Dr. Goldsmith’s Rule 10b5-1 trading plan is intended to satisfy the affirmative defense
132
conditions of Rule 10b5-1(c) promulgated under the Exchange Act, and provides for (i) the potential exercise and sale of up to 150,000 shares of our
common stock subject to a stock option held by Dr. Goldsmith, (ii) the potential sale of up to 3,000 shares of our common stock by a trust for which Dr.
Goldsmith is a trustee and (iii) the potential sale of up to 3,000 shares of our common stock by a trust for which Dr. Goldsmith is a trustee. The trading plan
will terminate at the earlier of the execution of all trading orders pursuant to the plan and March 31, 2026.
On December 23, 2024, Wei Lin, M.D., our Chief Medical Officer, adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) promulgated under the Exchange Act. Dr. Lin’s trading arrangement covers the sale of the number of shares of our common
stock required to be sold to cover tax withholding obligations for restricted stock unit awards that vest after March 15, 2025. The aggregate number of
shares to be sold pursuant to this trading arrangement is dependent on the number of restricted stock units awards that may be granted to Dr. Lin from time
to time and the taxes on these restricted stock unit awards, and, therefore, is indeterminable at this time.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
133
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Information required by this item will be contained in our definitive proxy statement to be filed with the SEC on Schedule 14A within 120 days after
December 31, 2024, and is incorporated herein by reference.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees, which is available on our website at
ir.revmed.com/. The Code of Business Conduct and Ethics contains general guidelines for conducting the business of our company consistent with the
highest standards of business ethics and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002
and Item 406 of Regulation S-K. In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Business Conduct and Ethics
that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions
and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the
name of such person who is granted the waiver and the date of the waiver on our website in the future.
Insider Trading Compliance Policy and Guidelines
We have adopted an insider trading compliance policy and procedures governing the purchase, sale and other dispositions of our securities by our directors,
officers, employees and certain contractors and consultants that are designed to promote compliance with insider trading laws, rules and regulations, and
applicable Nasdaq listing standards, as well as procedures designed to further the foregoing purposes. A copy of our insider trading policy is filed with this
Annual Report on Form 10-K as Exhibit 19.1.
Item 11. Executive Compensation.
Information required by this item will be contained in our definitive proxy statement to be filed with the SEC on Schedule 14A to be filed within 120 days
after December 31, 2024, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information required by this item will be contained in our definitive proxy statement to be filed with the SEC on Schedule 14A to be filed within 120 days
after December 31, 2024, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information required by this item will be contained in our definitive proxy statement to be filed with the SEC on Schedule 14A to be filed within 120 days
after December 31, 2024, and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
Information required by this item will be contained in our definitive proxy statement to be filed with the SEC on Schedule 14A to be filed within 120 days
after December 31, 2024, and is incorporated herein by reference.
134
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a)
The following documents are filed as part of this Annual Report on Form 10-K:
1.
Financial Statements:
The following financial statements and schedules of the Registrant are contained in Part II, Item 8, “Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K:
Page
Report of Independent Registered Public Accounting Firm
103
Consolidated Balance Sheets
105
Consolidated Statements of Operations and Comprehensive Loss
106
Consolidated Statements of Stockholders’ Equity
107
Consolidated Statements of Cash Flows
108
Notes to Consolidated Financial Statements
109
2.
Financial Statement Schedules
No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or notes
thereto.
(b)
Exhibits
The exhibits listed in the following “Exhibit Index” are filed, furnished or incorporated by reference as part of this Annual Report.
135
Exhibit Index
Incorporated by reference
Filed
herewith
Exhibit
number
Exhibit description
Form
Date
Number
3.1
Amended and Restated Certificate of Incorporation.
8-K
2/18/2020
3.1
3.2
Amended and Restated Bylaws.
8-K
3/8/2021
3.1
4.1
Reference is made to Exhibits 3.1 through 3.2.
4.2
Form of Common Stock Certificate.
S-1
1/17/2020
4.2
4.3
Description of Securities.
X
4.4(a)
Warrant Agreement, dated April 6, 2021, by and between Continental Stock Transfer &
Trust Company and EQRx, Inc.
10-K
2/26/2024
4.4(a)
4.4(b)
Appointment, Assignment and Assumption Agreement, dated November 9, 2023, by and
among EQRx, Inc., Revolution Medicines, Inc., Continental Stock Transfer & Trust
Company and Equiniti Trust Company, LLC.
8-A
11/15/2023
4.2(b)
4.5
Form of Pre-Funded Warrant
8-K
12/5/2024
4.1
10.1A†
Collaborative Research, Development and Commercialization Agreement, dated as of June
8, 2018, by and between Revolution Medicines, Inc. and Aventis, Inc., as amended.
S-1
1/17/2020
10.1
10.1B†
Letter Agreement and Amendment, dated as of August 5, 2021 by and between Revolution
Medicines, Inc. and Genzyme Corporation.
10-Q
8/11/2021
10.2
10.2A
Lease between HCP LS Redwood City, LLC and Revolution Medicines, Inc., dated as of
January 15, 2015.
S-1
1/17/2020
10.3A
10.2B
First Amendment to Lease by and between HCP LS Redwood City, LLC and Revolution
Medicines, Inc., dated as of September 16, 2016.
S-1
1/17/2020
10.3B
10.2C
Sublease between OncoMed Pharmaceuticals, Inc. and Revolution Medicines, Inc., dated
as of January 16, 2019.
S-1
1/17/2020
10.3C
10.2D
Second Amendment to Lease by and between HCP LS Redwood City, LLC and
Revolution Medicines, Inc., dated as of April 17, 2020.
10-Q
5/14/2020
10.4
10.2E
Third Amendment to Lease by and between HCP LS Redwood City, LLC and Revolution
Medicines, Inc., dated as of November 1, 2021.
10-Q 11/10/2021
10.1
10.2F
Fourth Amendment to Lease and between HCP LS Redwood City, LLC and Revolution
Medicines, Inc., dated as of March 24, 2023
10-Q
5/8/2023
10.2
10.2G
Fifth Amendment to Lease and between HCP LS Redwood City, LLC and Revolution
Medicines, Inc., dated as of August 3, 2023
10-Q
11/6/2023
10.3
10.2H
Sixth Amendment, dated as of July 12, 2024, to Lease by and between HCP LS Redwood
City, LLC and Revolution Medicines, Inc.
10-Q
11/6/2024
10.1
10.2I
Seventh Amendment, dated as of November 5, 2024, to Lease by and between HCP LS
Redwood City, LLC and Revolution Medicines, Inc.
X
10.2J
Sublease between Editco Bio Inc. and Revolution Medicines, Inc., dated as of November
5, 2024
X
10.3(a)#
2014 Equity Incentive Plan, as amended.
S-1
1/17/2020
10.6(a)
10.3(b)#
Form of Amended and Restated Early Exercise Stock Option Grant Notice and Amended
and Restated Stock Option Agreement under 2014 Equity Incentive Plan, as amended.
S-1
1/17/2020
10.6(b)
136
Incorporated by reference
Filed
herewith
Exhibit
number
Exhibit description
Form
Date
Number
10.4(a)#
2020 Incentive Award Plan.
S-1/A
2/3/2020
10.7(a)
10.4(b)#
Form of Stock Option Grant Notice and Stock Option Agreement under the 2020 Incentive
Award Plan.
S-1/A
2/3/2020
10.7(b)
10.4(c)#
Form of Restricted Stock Award Agreement under the 2020 Incentive Award Plan.
S-1/A
2/3/2020
10.7(c)
10.4(d)#
Form of Restricted Stock Unit Award Grant Notice under the 2020 Incentive Award Plan. S-1/A
2/3/2020
10.7(d)
10.5#
2020 Employee Stock Purchase Plan.
S-1/A
2/3/2020
10.8
10.6A#
Employment Agreement by and between Revolution Medicines, Inc. and Mark A.
Goldsmith, M.D., Ph.D.
S-1
1/17/2020
10.9
10.6B#
First Amendment to Employment Agreement dated June 10, 2022 by and between
Revolution Medicines, Inc. and Mark Goldsmith, M.D., Ph.D.
8-K
06/10/2022
10.1
10.7#
Employment Agreement by and between Revolution Medicines, Inc. and Steve Kelsey,
M.D., FRCP, FRCPath.
S-1
1/17/2020
10.10
10.8#
Employment Agreement by and between Revolution Medicines, Inc. and Margaret Horn,
J.D.
S-1
1/17/2020
10.11
10.9#
Non-Employee Director Compensation Program.
10-Q 05/08/2024
10.1
10.10#
Form of Indemnification Agreement for directors and officers.
S-1/A
2/3/2020
10.13
10.11#
Employment Agreement, dated as of August 1, 2024 by and between Revolution
Medicines, Inc. and Jack Anders.
10-Q 08/07/2024
10.2
10.12#
Employment Agreement dated as of August 1, 2024 by and between Revolution
Medicines, Inc. and Xiaolin Wang, Sc.D.
10-Q 08/07/2024
10.3
19.1^
Insider Trading Compliance Policy and Procedures
X
21.1
Subsidiaries of Registrant.
X
23.1
Consent of Independent Registered Public Accounting Firm.
X
24.1
Power of Attorney (included on signature page to this Form 10-K).
X
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
X
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
X
32.1*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
97
Policy for Recovery of Erroneously Awarded Compensation
10-K 02/26/2024
97
101.INS
Inline XBRL Instance Document.
X
101.SCH Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document.
X
137
Incorporated by reference
Filed
herewith
Exhibit
number
Exhibit description
Form
Date
Number
104
The cover page from Revolution Medicines, Inc.’s Annual Report on Form 10-K for the
year ended December 31, 2024, formatted in Inline XBRL and contained in Exhibit 101.
X
† Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) is the type of information that
Revolution Medicines, Inc. treats as private or confidential.
^ Portions of this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. Revolution Medicines, Inc. undertakes to furnish a copy
of all omitted schedules and exhibits to the Securities and Exchange Commission upon its request.
# Indicates management contract or compensatory plan.
* The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K, are deemed furnished and not filed with the
Securities and Exchange Commission and are not to be incorporated by reference into any filing of Revolution Medicines, Inc. under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K,
irrespective of any general incorporation language contained in such filing.
Item 16. Form 10-K Summary.
None.
138
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Revolution Medicines, Inc.
Date: February 26, 2025
By:
/s/ Mark A. Goldsmith
Mark A. Goldsmith, M.D., Ph.D.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mark A.
Goldsmith, M.D., Ph.D., Jack Anders and Jeff Cislini and each of them acting individually, as his or her true and lawful attorneys-in-fact and agents, each
with full power of substitution, for him in any and all capacities, to sign any and all amendments to this annual report on Form 10-K, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ Mark A. Goldsmith
President, Chief Executive Officer and Director
February 26, 2025
Mark A. Goldsmith, M.D., Ph.D.
(Principal Executive Officer)
/s/ Jack Anders
Chief Financial Officer
February 26, 2025
Jack Anders
(Principal Financial and Accounting Officer)
/s/ Elizabeth McKee Anderson
Director
February 26, 2025
Elizabeth McKee Anderson
/s/ Flavia Borellini
Director
February 26, 2025
Flavia Borellini, Ph.D.
/s/ Alexis Borisy
Director
February 26, 2025
Alexis Borisy
/s/ Frank Clyburn
Director
February 26, 2025
Frank Clyburn
/s/ Sandra Horning
Director
February 26, 2025
Sandra J. Horning, M.D.
/s/ Lorence Kim
Director
February 26, 2025
Lorence Kim, M.D.
/s/ Sushil Patel
Director
February 26, 2025
Sushil Patel, Ph.D.
/s/ Thilo Schroeder
Director
February 26, 2025
Thilo Schroeder, Ph.D.
/s/ Barbara Weber
Director
February 26, 2025
Barbara Weber, M.D.
Exhibit 4.3
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Revolution Medicines, Inc. (“we,” “us,” “our” and the “Company”) has two classes of securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”): our common stock and public warrants. The following description of our common stock and warrants is a
summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our amended and restated certificate of
incorporation; our amended and restated bylaws; our amended and restated investors’ rights agreement to which we and certain of our stockholders are
parties; the warrant-related documents described herein, which are incorporated by reference as exhibits to the Annual Report on Form 10-K, of which
this exhibit is a part, and by applicable law. We encourage you to read our amended and restated certificate of incorporation; our amended and restated
bylaws; our amended and restated investors’ rights agreement; the warrant-related documents described herein and the applicable provisions of Delaware
law for more information.
General
Our authorized capital stock consists of 310,000,000 shares, consisting of 300,000,000 shares of common stock, $0.0001 par value, and 10,000,000 shares
of preferred stock, $0.0001 par value.
Common Stock
Voting Rights
Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of
directors. Our stockholders do not have cumulative voting rights in the election of directors. Accordingly, holders of a majority of the voting shares are able
to elect all of the directors. In addition, the affirmative vote of holders of 66-2/3% of the voting power of all of the then-outstanding voting stock is required
to take certain actions, including amending certain provisions of our amended and restated certificate of incorporation, such as the provisions relating to
amending our amended and restated bylaws, the classified board and director liability.
Dividends
Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of our common stock are entitled to receive dividends, if any,
as may be declared from time to time by our board of directors out of legally available funds.
Liquidation
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in the net assets legally available for
distribution to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders
of any then-outstanding shares of preferred stock.
Rights and Preferences
Holders of our common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions
applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to and may be adversely affected by
the rights of the holders of shares of any series of our preferred stock that we may designate in the future.
Fully Paid and Nonassessable
All of our outstanding shares of common stock are fully paid and nonassessable.
Warrants
Pre-Funded Warrants
On December 5, 2024, pursuant to an underwritten follow-on public offering, we sold 16,576,088 shares of our common stock and pre-funded warrants to
purchase up to 2,173,917 shares of our common stock (“Pre-Funded Warrants”).
As of December 31, 2024, Pre-Funded Warrants to purchase up to 2,173,917 shares of our common stock were outstanding.
The Pre-Funded Warrants have an exercise price of $0.0001 per share of common stock and are exercisable until exercised in full, subject to an ownership
limitation. The exercise price and number of shares of common stock issuable upon exercise of the Pre-Funded Warrants is subject to appropriate
adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our shares
of common stock, as well as upon any distribution of assets, including cash, stock or other property, to our stockholders. The exercise price of the Pre-
Funded Warrants will not be adjusted below the par value per share of our common stock.
We issued the Pre-Funded Warrants in certificated form as individual warrant agreements to the purchasers. A holder of a Pre-Funded Warrant certificate
may exercise such Pre-Funded Warrant, in whole or in part, with the notice of exercise form attached to the Pre-Funded Warrant certificate completed and
executed as indicated, accompanied by full payment of the exercise price for the number of Pre-Funded Warrants being exercised.
Under the terms of the Pre-Funded Warrants, a holder (together with its affiliates) may not exercise any portion of a Pre-Funded Warrant to the extent that
the holder would beneficially own more than 4.99% of our common stock outstanding immediately after exercise. However, upon at least 61 days’ prior
notice from the holder to the Company, a holder with a 4.99% beneficial ownership blocker may increase or decrease the amount of ownership of
outstanding common stock after exercising the holder’s Pre-Funded Warrant up to 19.99% of our common stock outstanding immediately after giving
effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrants.
The holders of the Pre-Funded Warrants must pay the exercise price upon exercise of the Pre-Funded Warrants, unless such holders are utilizing the
cashless exercise provision of the Pre-Funded Warrants. The Pre-Funded Warrants may be exercised at such time by means of a “cashless exercise” in
which, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the
holder may elect instead to receive upon such exercise the net value of the Pre-Funded Warrant in shares of common stock determined according to a
formula set forth in the Pre-Funded Warrants.
In the event of certain fundamental transactions (as described in the Pre-Funded Warrants), a holder of Pre-Funded Warrants will be entitled to receive,
upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that such holder would have received had they
exercised the Pre-Funded Warrants immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the Pre-
Funded Warrants.
Except by virtue of a holder’s ownership of shares of our common stock, the holder of a Pre-Funded Warrant does not have the rights or privileges of a
holder of shares of our common stock, including any voting rights, until such holder exercises the Pre-Funded Warrant.
We do not intend to apply for listing of the Pre-Funded Warrants on any securities exchange or other trading system.
Public Warrants
Each of our public warrants entitles the registered holder thereof to purchase 0.1112 shares of our common stock at an exercise price of $11.50 per such
fractional share, subject to adjustment as discussed below. Pursuant to that certain Warrant Agreement, dated April 6, 2021, between EQRx and
Continental Stock Transfer & Trust Company (the “Warrant Agreement”), a warrant holder may exercise its public warrants only for a whole number of
shares of
common stock. If, upon exercise of the public warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round
down to the nearest whole number the number of shares of common stock to be issued to the warrant holder. The public warrants expire December 17,
2026, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We are not obligated to deliver any shares of common stock pursuant to the exercise of a public warrant and have no obligation to settle such public
warrant exercise unless a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) with respect to the shares of common
stock underlying the public warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below
with respect to registration. No public warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their public warrants, unless the issuance of the shares upon such public warrant exercise is registered or qualified under the securities
laws of the state of the exercising holder, or an exemption is available. In the event that the conditions in the two immediately preceding sentences are not
satisfied with respect to a public warrant, the holder of such public warrant will not be entitled to exercise such public warrant and such public warrant may
have no value and expire worthless.
During any period when we have failed to maintain an effective registration statement covering the shares of common stock issuable upon exercise of the
public warrants, warrant holders have the right to exercise public warrants on a “cashless basis” in accordance with the provisions of the Warrant
Agreement. Notwithstanding the above, if our common stock is at the time of any exercise of a public warrant not listed on a national securities exchange
such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public
warrants who exercise their public warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act (or any successor rule).
Redemption of Warrants When the Price per Share of Common Stock Equals or Exceeds $161.87 — We may redeem the outstanding public warrants:
•
in whole and not in part;
•
at a price of $0.01 per public warrant;
•
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
•
if, and only if, the closing price of the common stock equals or exceeds $161.87 per share (as adjusted) for any 20 trading days within a 30-
trading day period ending three trading days before sending the notice of redemption to warrant holders.
If and when the public warrants become redeemable, we may exercise our redemption right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws.
Redemption of Warrants When the Price per Share of Common Stock Equals or Exceeds $89.93 — We may redeem the outstanding public warrants:
•
in whole and not in part;
•
at $0.10 per public warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their public warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair
market value of our common stock;
•
if, and only if, the closing price of our common stock equals or exceeds $89.93 per share (as adjusted) for any 20 trading days within the
30-trading day period ending three trading days before we send the notice of redemption to the warrant holders; and
•
if the closing price of our common stock for any 20 trading days within a 30-trading day period ending three trading days before we send
notice of redemption to the warrant holders is less than $161.87 per
share (as adjusted), the private warrants (as defined below) must also be concurrently called for redemption on the same terms as the
outstanding public warrants, as described above.
If the foregoing conditions are satisfied and we issue a notice of redemption of the public warrants, each warrant holder will be entitled to exercise its
public warrant prior to the scheduled redemption date. However, the price of our common stock may fall below the $161.87 redemption trigger price as
well as the warrant exercise price after the redemption notice is issued.
Redemption Procedures and Cashless Exercise. If we call the public warrants for redemption as described above, our management will have the option to
require any holder that wishes to exercise its public warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their
public warrants on a “cashless basis,” our management will consider, among other factors, its cash position, the number of public warrants that are
outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of common stock issuable upon the exercise of the public
warrants. If our management takes advantage of this option, all holders of public warrants would pay the exercise price by surrendering their public
warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock
underlying the public warrants, multiplied by the difference between the exercise price of the public warrants and the “fair market value” (defined below)
by (y) the fair market value. The “fair market value” means the average reported last sale price of our common stock for the ten trading days ending on the
third trading day prior to the date on which the notice of redemption is sent to the holders of public warrants. If our management takes advantage of this
option, the notice of redemption will contain the information necessary to calculate the number of shares of common stock to be received upon exercise of
the public warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be
issued and thereby lessen the dilutive effect of a warrant redemption.
A holder of a public warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise
such public warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual
knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the shares of our common stock outstanding immediately
after giving effect to such exercise.
Anti-dilution Adjustments. If the number of outstanding shares of common stock is increased by a stock dividend payable in shares of common stock, or by
a split-up of shares of common stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of
shares of common stock issuable on exercise of each public warrant will be increased in proportion to such increase in the outstanding shares of common
stock. A rights offering to holders of common stock entitling holders to purchase shares of common stock at a price less than the fair market value (defined
below) will be deemed a stock dividend of a number of shares of common stock equal to the product of (i) the number of shares of common stock actually
sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for common
stock) and (ii) one (1) minus the quotient of (x) the price per share of common stock paid in such rights offering divided by (y) the fair market value. For
these purposes, (i) if the rights offering is for securities convertible into or exercisable for common stock, in determining the price payable for common
stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and
(ii) fair market value means the volume weighted average price of common stock as reported during the ten (10) trading day period ending on the trading
day prior to the first date on which the shares of common stock trade on the applicable exchange or in the applicable market, regular way, without the right
to receive such rights.
In addition, if we, at any time while the public warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other
assets to the holders of common stock on account of such shares of common stock (or other shares of our capital stock into which the public warrants are
convertible), other than (a) as described above or (b) certain ordinary cash dividends, then the public warrant exercise price will be decreased, effective
immediately after the effective date of such event, by the amount of cash and/or the fair market value as determined by our board of directors in good faith
of any securities or other assets paid on each share of common stock in respect of such event.
If the number of outstanding shares of our common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of
common stock or other similar event, then, on the effective date of such
consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of common stock issuable on exercise of each public
warrant will be decreased in proportion to such decrease in outstanding shares of common stock.
Whenever the number of shares of common stock purchasable upon the exercise of the warrants is adjusted, as described above, the public warrant exercise
price will be adjusted (to the nearest cent) by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of
which will be the number of shares of common stock purchasable upon the exercise of the public warrants immediately prior to such adjustment, and (y)
the denominator of which will be the number of shares of common stock so purchasable immediately thereafter.
In case of any reclassification or reorganization of the outstanding shares of common stock (other than those described above or that solely affects the par
value of such shares of common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or
merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of our
common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially
as an entirety in connection with which we are dissolved, the holders of the public warrants will thereafter have the right to purchase and receive, upon the
basis and upon the terms and conditions specified in the public warrants and in lieu of the shares of our common stock immediately theretofore purchasable
and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash)
receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of
the public warrants would have received if such holder had exercised their public warrants immediately prior to such event. However, if such holders were
entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind
and amount of securities, cash or other assets for which each public warrant will become exercisable will be deemed to be the weighted average of the kind
and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange or
redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer made by us in connection with
redemption rights held by our stockholders) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together
with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or any successor rule)) of which such maker is a part, and
together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act (or any successor rule)) and any members
of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act (or any
successor rule)) more than 50% of the outstanding shares of common stock, the holder of a public warrant will be entitled to receive the highest amount of
cash, securities or other property to which such holder would actually have been entitled as a stockholder if such warrant holder had exercised the public
warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the common stock held by such holder had been purchased
pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent
as possible to the adjustments provided for in the Warrant Agreement. Additionally, if less than 70% of the consideration receivable by the holders of
common stock in such a transaction is payable in the form of common stock in the successor entity that is listed for trading on a national securities
exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the
registered holder of the public warrant properly exercises the public warrant within thirty days following public disclosure of the consummation of such
applicable event by us pursuant to a Current Report on Form 8-K filed with the Securities and Exchange Commission, the public warrant exercise price will
be reduced as specified in the Warrant Agreement based on the per share consideration minus Black-Scholes warrant value (as defined in the Warrant
Agreement) of the public warrant.
The public warrants were issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent,
and EQRx. On November 9, 2023, the public warrants became securities of the Company and Equiniti Trust Company, LLC became the warrant agent.
You should review a copy of the Warrant Agreement, which is incorporated by reference as an exhibit to the Annual Report on Form 10-K to which this
Exhibit 4.3 is filed as an exhibit, for a complete description of the terms and conditions applicable to the public warrants. The Warrant Agreement provides
that the terms of the public warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but
requires the vote or written
consent by the holders of at least 50% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered
holders of public warrants.
The public warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent (which
is currently Equiniti Trust Company, LLC), with the exercise form on the reverse side of the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by good certified check, good bank draft or by wire of
immediately available funds, for the number of public warrants being exercised. The warrant holders do not have the rights or privileges of holders of
common stock until they exercise their public warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of
the public warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Private Placement Warrants
Each of our private warrants entitles the registered holder thereof to purchase 0.1112 shares of our common stock at an exercise price of $11.50 per such
fractional share, subject to adjustment. If, upon exercise of the private warrants, a holder would be entitled to receive a fractional interest in a share, we
will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant holder. The terms of the
private warrants are substantially the same as to the public warrants; provided, that, except as described above in the discussion of the redemption of public
warrants when the price per share of our common stock equals or exceeds $89.93, the private warrants are exercisable on a cashless basis and are non-
redeemable for cash so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than
the initial purchasers or their permitted transferees, the private warrants are redeemable by the Company and exercisable by such holders on the same basis
as the public warrants.
Anti-Takeover Effects of Provisions of Delaware Law, Our Amended and Restated Certificate of Incorporation, and Our Amended and Restated
Bylaws
Some provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws could make the following
transactions more difficult: acquisition of us by means of a tender offer; acquisition of us by means of a proxy contest or otherwise; or removal of our
incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders
may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for
our shares.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. Because these provisions could have the effect
of discouraging others from attempting hostile takeovers, they may also inhibit temporary fluctuations in the market price of our common stock that often
result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible
that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests. We believe
that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their
terms.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law, which prohibits persons deemed “interested stockholders” from engaging in a
“business combination” with a publicly-held Delaware corporation for three years following the date these persons become interested stockholders unless
the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another
prescribed exception applies. Generally, an “interested stockholder” is a person who, together with its affiliates and associates, beneficially owns, or within
three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business
combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this
provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of
directors, such as discouraging takeover attempts that might result in a premium over the market price of our common stock.
Undesignated Preferred Stock
The ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or changes to our management.
Special Stockholder Meetings
Our amended and restated certificate of incorporation and our amended and restated bylaws provide that a special meeting of stockholders may be called
only by our board of directors, or by our President or Chief Executive Officer.
Requirements for Advance Notification of Stockholder Nominations and Proposals
Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election
as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.
Elimination of Stockholder Action by Written Consent
Our amended and restated certificate of incorporation and our amended and restated bylaws eliminate the right of stockholders to act by written consent
without a meeting.
Classified Board; Election and Removal of Directors; Filling Vacancies
Our board of directors is divided into three classes. The directors in each class serve for a three-year term, one class being elected each year by our
stockholders, with staggered three-year terms. Only one class of directors is elected at each annual meeting of our stockholders, with the other classes
continuing for the remainder of their respective three-year terms. Because our stockholders do not have cumulative voting rights, our stockholders holding
a majority of the shares of common stock outstanding are able to elect all of our directors. Our amended and restated certificate of incorporation provides
for the removal of any of our directors only for cause and requires a stockholder vote by the holders of at least 66-2/3% of the voting power of the then-
outstanding voting stock.
Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of the board, may only
be filled by a resolution of our board of directors unless our board of directors determines that such vacancies shall be filled by the stockholders. This
system of electing and removing directors and filling vacancies may tend to discourage a third party from making a tender offer or otherwise attempting to
obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors.
Choice of Forum
Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the
sole and exclusive forum for (i) any state law derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a
fiduciary duty owed by any of our directors or officers to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any
provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws or (iv) any
action asserting a claim against us governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to
enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction; and provided further
that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be
brought in another state or federal court sitting in the State of Delaware. Our amended and restated bylaws also provide that the federal district courts of the
United States of America will be the exclusive forum for the resolution of any complaint asserting a cause or causes of action under
the Securities Act. Such provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise
to such complaint and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared
or certified any part of the documents underlying the offering. Nothing in our amended and restated certificate of incorporation or amended and restated
bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our
directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be
deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Amendment of Certificate of Incorporation Provisions
The amendment of any of the above provisions, except for the provision making it possible for our board of directors to issue undesignated preferred stock,
would require approval by a stockholder vote by the holders of at least 66-2/3% of the voting power of the then outstanding voting stock.
Nasdaq Global Select Market Listing
Our common stock and public warrants are listed on the Nasdaq Global Select Market under the symbols “RVMD” and “RVMDW,” respectively.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock and warrants is Equiniti Trust Company, LLC. The transfer agent and registrar’s address is 6201
15th Avenue, Brooklyn, New York 11219.
Exhibit 10.2I
SEVENTH AMENDMENT TO LEASE
This SEVENTH AMENDMENT TO LEASE (“Seventh Amendment”) is made and entered into as of November 5,
2024 (the “Effective Date”), by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company
(“Landlord”), and REVOLUTION MEDICINES, INC., a Delaware corporation (“Tenant”).
R E C I T A L S :
A. Landlord and Tenant are parties to the Lease dated January 15, 2015 (the “Original Lease”), as amended by that
certain First Amendment to Lease dated September 16, 2016 (the “First Amendment”), that certain Second Amendment to
Lease dated April 17, 2020 (the “Second Amendment”), that certain Third Amendment to Lease dated November 1, 2021 (the
“Third Amendment”), that certain Fourth Amendment to Lease dated March 24, 2023 (the “Fourth Amendment”), that certain
Fifth Amendment to Lease dated August 3, 2023 (the “Fifth Amendment”) and that certain Sixth Amendment to Lease dated
July 12, 2024 (the “Sixth Amendment”, and together with the Original Lease, the First Amendment, the Second Amendment,
the Third Amendment, the Fourth Amendment, the Fifth Amendment, and the Sixth Amendment, the “Lease”), whereby Tenant
leases approximately 186,104 RSF (“Existing Premises”) comprised of:
(i)
that certain premises (the “700 Premises”) containing approximately 41,916 RSF consisting of the entire building (“700
Building”) located at 700 Saginaw Drive, Redwood City, CA,
(ii)
that certain premises (the “300 Premises”) containing approximately 19,483 RSF consisting of the entire building (the
“300 Building”) located at 300 Saginaw Drive, Redwood City, CA,
(iii)
that certain premises (the “800 Premises”) containing approximately 41,445 RSF consisting of the entire building (“800
Building”) located at 800 Saginaw Drive, Redwood City, CA,
(iv)
that certain premises (the “900 Premises”) containing approximately 39,967 RSF consisting of the entire building (“900
Building”) located at 900 Saginaw Drive,
Redwood City, CA, and
(v)
that certain premises (the “500 Premises”) containing approximately 43,293 RSF consisting of the entire building (“500
Building”) located at 500 Saginaw Drive, Redwood City, CA.
B. Tenant desires to expand the Existing Premises to include that certain space consisting of approximately 46,961 RSF
(the “Fifth Expansion Premises”) comprising all of the rentable area of the building located at 600 Saginaw Drive, Redwood
City, CA (the “600 Building”), as delineated on Exhibit A attached hereto and made a part hereof, and to make other
2
modifications to the Lease, and in connection therewith, Landlord and Tenant desire to amend the Lease as hereinafter provided.
With the addition of the Fifth Expansion Premises, the total Premises will contain 233,065 RSF.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Capitalized Terms. All capitalized terms when used herein shall have the same meaning as is given such terms in the
Lease unless expressly superseded by the terms of this Seventh Amendment.
2. Modification of Premises.
2.1.
Effective as of the date Landlord tenders possession of the Fifth Expansion Premises to Tenant in the
condition required by this Seventh Amendment (such date, the “Fifth Expansion Commencement Date”), Tenant shall lease
from Landlord and Landlord shall lease to Tenant the Fifth Expansion Premises. Landlord shall be deemed to have tendered
possession of the Fifth Expansion Premises to Tenant upon the date that Landlord provides Tenant with a key or access card to
the Fifth Expansion Premises and the Fifth Expansion Premises is in the condition required by this Seventh Amendment, and no
action by Tenant shall be required therefor. If, for any reason, Landlord is delayed in tendering possession of the Fifth Expansion
Premises to Tenant on the Fifth Expansion Commencement Date, Landlord shall not be subject to any liability for such failure,
and the validity of this Lease shall not be impaired, but the Fifth Expansion Commencement Date shall be extended by one day
for each day after the Fifth Expansion Commencement Date until Landlord tenders possession of the Fifth Expansion Premises to
Tenant. Effective upon the Fifth Expansion Commencement Date, the Existing Premises shall be increased to include the Fifth
Expansion Premises. Landlord and Tenant hereby acknowledge that such addition of the Fifth Expansion Premises to the Existing
Premises shall, effective as of the Fifth Expansion Commencement Date, increase the size of the Premises to approximately
233,065 RSF. The Existing Premises and the Fifth Expansion Premises may hereinafter collectively be referred to as the
“Premises.” All references in the Lease, as amended, to the Building shall mean (i) the 700 Building when the context applies to
the 700 Building or any portion of the Premises located in the 700 Building, (ii) the 300 Building when the context applies to the
300 Building or any portion of the Premises located in the 300 Building, (iii) the 800 Building when the context applies to the
800 Building or any portion of the Premises located in the 800 Building, (iv) the 900 Building when the context applies to the
900 Building or any portion of the Premises located in the 900 Building, (v) the 500 Building when the context applies to the 500
Building or any portion of the Premises located in the 500 Building, (vi) the 600 Building when the context applies to the 600
Building or any portion of the Premises located in the 600 Building, and (vii) each of the 700 Building, the 300 Building, the 800
Building, the 900 Building, the 500 Building, and the 600 Building when the context applies to each of such buildings.
3
2.2.
As a condition precedent to the effectiveness of this Seventh Amendment for Landlord’s benefit only, (a)
Landlord’s existing lease for the Fifth Expansion Premises with Synthego Corporation, a Delaware corporation (“Prior
Tenant”), shall have either expired or have been terminated, (b) Prior Tenant shall have vacated and surrendered the Fifth
Expansion Premises to Landlord, (c) Prior Tenant’s existing sublease with EditCo Bio, Inc., a Delaware corporation
(“Sublessee”), shall have either expired or have been terminated to Landlord’s satisfaction, and (d) Tenant shall have entered into
a new sublease with Sublessee (the “New Sublease”) in a form mutually and reasonably agreed upon by Landlord, Tenant and
Sublessee, provided Tenant shall have obtained Landlord’s prior written consent of such New Sublease pursuant to the terms of
the Lease, in a form mutually and reasonably agreed upon by Landlord, Tenant and Sublessee (the “Landlord Consent
Agreement”). As a condition precedent to the effectiveness of this Seventh Amendment for Tenant’s benefit only, (a) Landlord
shall have executed this Seventh Amendment, (b) Tenant and Sublessee shall have fully executed the New Sublease, and (c) the
Landlord Consent Agreement shall have been executed by all parties thereto.
3. Lease Term.
3.1.
Fifth Expansion Term. Landlord and Tenant acknowledge that Tenant’s lease of the Existing Premises
is scheduled to expire on December 31, 2035, pursuant to the terms of the Lease (the “Lease Expiration Date”). For purposes of
this Seventh Amendment, the term “Expansion Year” shall mean each consecutive twelve (12) month period during the Fifth
Expansion Term; provided, however, that the first (1st) Expansion Year shall commence on the Fifth Expansion Commencement
Date and end on the last day of the month in which the first anniversary of the Fifth Expansion Commencement Date occurs
(unless the Fifth Expansion Commencement Date is the first (1st) day of a calendar month, in which event the first Fifth
Expansion Year shall end on the day immediately preceding the first anniversary of the Fifth Expansion Commencement Date),
and the second and each succeeding Fifth Expansion Year shall commence on the first day of the next calendar month; and
further provided that the last Fifth Expansion Year shall end on the Lease Expiration Date. The period of time commencing on
the Fifth Expansion Commencement Date and terminating on the Lease Expiration Date, shall be referred to herein as the “Fifth
Expansion Term.”
3.2.
Option Term. Landlord and Tenant acknowledge and agree that Tenant shall continue to have one (1)
option to extend the Lease Term for a period of ten (10) years in accordance with, and pursuant to the terms of, Section 2.2 of the
Original Lease, Section 3.2 of the Second Amendment, Section 3.2 of the Third Amendment, Section 3.2 of the Fourth
Amendment, and Section 3.2 of the Sixth Amendment; provided, however, (i) all references therein to the “initial Lease Term”
shall be deemed to refer to the “Fifth Expansion Term”, (ii) such right shall apply to the entire Premises existing as of the Lease
Expiration Date (i.e., the Existing Premises and the Fifth Expansion Premises), and (iii) Tenant may only exercise such option
with respect to the entire Premises existing as of the Lease Expiration Date (i.e., the Existing Premises and the Fifth Expansion
Premises).
4
4. Base Rent.
4.1.
Existing Premises. Notwithstanding anything to the contrary in the Lease as hereby amended, Tenant
shall continue to pay Base Rent for the Existing Premises in accordance with the terms of the Lease.
4.2.
Fifth Expansion Premises.
(a) Commencing five (5) business days after the Fifth Expansion Commencement Date and continuing
through the last day of the month in which the thirty-six (36)-month anniversary of the Fifth Expansion Commencement Date
occurs (the “Rent Adjustment Date”), unless the Fifth Expansion Commencement Date is the first day of a month, in which
event the Rent Adjustment Date shall be last day of the month prior to the 36-month anniversary of the Fifth Expansion
Commencement Date, Tenant shall pay to Landlord monthly installments of Base Rent for the Fifth Expansion Premises as
follows:
Annualized
Base Rent
Monthly Installment
of Base Rent
Approximate
Monthly Rental
Rate per RSF
$3,297,996.24
$274,833.02
$5.85
$3,413,426.16
$284,452.18
$6.06
$3,532,896.00
$294,408.00
$6.27
$3,656,547.36
$304,712.28
$6.49
Period During Fifth
Expansion Term
November 12,
2024 – May 31,
2025*
June 1, 2025 –
May 31, 2026
June 1, 2026 –
May 31, 2027
June 1, 2027 –
October 31, 2027
* The November 12, 2024 date is based upon an anticipated Fifth Expansion Commencement Date of November 6, 2024.
(b) Commencing on the day after the Rent Adjustment Date and continuing throughout the remainder
of the Fifth Expansion Term, Tenant shall pay to Landlord monthly installments of Base Rent for the Fifth Expansion Premises at
the same per RSF Base Rent as applies to the Fourth Expansion Premises for the then current Expansion Year as noted in the
Sixth Amendment.
5
Tenant shall pay the first month’s Base Rent due with respect to the Fifth Expansion Premises within thirty (30) days
following the mutual execution of this Seventh Amendment.
5. Tenant’s Share of Direct Expenses.
5.1.
Existing Premises. Tenant shall continue to pay Tenant’s Share of Direct Expenses in connection with
the Existing Premises in accordance with the terms of the Lease through and including the Lease Expiration Date.
5.2.
Fifth Expansion Premises. Commencing on the Fifth Expansion Commencement Date and continuing
throughout the Fifth Expansion Term, Tenant shall pay Tenant’s Share of Direct Expenses in connection with the Fifth
Expansion Premises in accordance with the terms of the Lease, provided that with respect to the calculation of Tenant’s Share of
Direct Expenses in connection with the Fifth Expansion Premises, Tenant’s Share shall equal 100% of the 600 Building.
6. Condition of Fifth Expansion Premises. Except as otherwise set forth in the Tenant Work Letter attached hereto as
Exhibit B, Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of
the Fifth Expansion Premises, and Tenant shall accept the Fifth Expansion Premises in its presently existing, “as-is” condition,
provided that as of the Fifth Expansion Commencement Date, the Fifth Expansion Premises shall be in compliance with
Applicable Laws (including with respect to ADA requirements and Hazardous Materials) in effect and enforced as of such date to
the extent necessary to obtain or maintain a certificate of occupancy, final sign-off or the legal equivalent thereof for the Fifth
Expansion Premises, in broom clean condition and reasonably weather-tight. Notwithstanding the foregoing, Landlord and
Tenant acknowledge and agree that Sublessee will be in possession of a portion of the Fifth Expansion Premises as of the Fifth
Expansion Commencement Date pursuant to the terms of the New Sublease. Any failure of the Premises to be in such condition
at such time shall be remedied by Landlord at Landlord’s sole cost and expense, which shall be Tenant’s sole remedy for any
such failure. Tenant shall accept all laboratory systems and process utilities in their presently existing, as-is condition and Tenant
shall be solely responsible for all costs related to their conditional use. Notwithstanding the foregoing or anything in the Lease to
the contrary, Landlord shall, at Landlord’s sole cost and expense (which shall not be deemed an Operating Expense), repair or
replace any failed or inoperable portion of the roof, roof membrane, or Building Systems serving the Fifth Expansion Premises
and shall keep the same in good working order during the first (1st) year following the Fifth Expansion Commencement Date
(“Warranty Period”), provided that the need to repair or replace was not caused by the misuse, misconduct, damage,
destruction, omissions, and/or negligence of Tenant, its subtenants and/or assignees, if any, or any company which is acquired,
sold or merged with Tenant (collectively, “Tenant Damage”), or by any modifications, Alterations or improvements constructed
by or on behalf of Tenant. Landlord shall coordinate such work with Tenant and shall utilize commercially reasonable efforts to
perform the same in a manner designed to minimize interference with Tenant’s use of the Premises. To the extent repairs which
Landlord is required to make pursuant to this Section 6 are necessitated in part by Tenant Damage, then to the extent the same are
not covered by Landlord’s insurance, Tenant shall reimburse Landlord for an equitable proportion of the cost of such repair. In
addition, Landlord shall use commercially reasonable efforts to work with the local jurisdiction and property association to cause
Chesapeake
6
Drive and Saginaw Drive, if such roads have deteriorated below the standards of a First Class Life Sciences Project, to be
repaved within the 2025 calendar year, but in no event shall Landlord be responsible for, nor shall the Rent be reduced or
otherwise abated due to, any failure to repave, or any delay in such repaving.
7. Damage and Destruction.
7.1.
As of the date of this Seventh Amendment, all references in Section 11.2 of the Lease to “Building” are
hereby revised to state “the 700 Building, the 300 Building, the 800 Building, the 900 Building, the 500 Building or the 600
Building, as applicable.” Further, in addition to Landlord’s rights under Section 11.2 of the Lease to terminate the Lease, as
amended, in the event that the conditions specified in such Section 11.2 are satisfied, Landlord shall also have the right to elect to
terminate Tenant’s lease of the portion of the Premises in only one of the 700 Building, the 300 Building, the 800 Building, the
900 Building, the 500 Building, or the 600 Building, and in such event Tenant’s lease of the portion of the Premises in the non-
terminated Building shall remain in full force and effect.
7.2.
The sentence added at the end of Section 11.2 of the Lease by the terms of Section 8.2 of the Sixth
Amendment is hereby replaced with the following:
“Alternatively, upon the termination of Tenant’s lease of the portion of the Premises in one or the other of the
700 Building, the 300 Building, the 800 Building, the 900 Building, the 500 Building, or the 600 Building,
under any of the provisions of this Article 11, the parties shall be released with respect to the provisions of the
Lease which are applicable to the terminated portion of the Premises without further obligation to the other from
the date possession of the terminated portion of the Premises is surrendered to Landlord, except for items which
have theretofore accrued and are then unpaid.”
8. Lease Bifurcation. Landlord and Tenant hereby acknowledge that Landlord may, in its reasonable discretion (e.g., in
connection with the financing, refinancing, or sale of any or all of the Project), require that separate leases exist with regard to
each of the 700 Building, the 300 Building, the 800 Building, the 900 Building, the 500 Building, and the 600 Building. If
Landlord so reasonably requires, the parties agree to bifurcate the Lease, as amended, into separate leases at Landlord’s sole cost
and expense; provided, however, such resulting, bifurcated leases shall, on a collective basis, (i) be on the same terms as set forth
in the Lease, as amended hereby (provided that in no event shall certain rights of Tenant which are reasonably assignable to only
one of such leases be duplicated in the other of such leases), and (ii) be in form and substance reasonably approved by Tenant.
Such bifurcated, replacement leases shall, if so required by Landlord and to the extent the same otherwise satisfy the
requirements of this Section 8, be executed by Landlord and Tenant within thirty (30) days following Landlord’s written election
and delivery of the same to Tenant.
9. Modification to Right of First Offer. Effective as of the Fifth Expansion Commencement Date, Section 10 of the
Sixth Amendment is hereby deleted in its entirety and of no further force or effect and Tenant shall have no further rights
thereunder. Notwithstanding the foregoing, Landlord hereby grants to the above-named Tenant (the “Original Tenant”) and any
7
Permitted Transferee an on-going right of first offer to lease with respect to the building located at 400 Saginaw Drive (the “First
Offer Space”). Such right of first offer shall be subordinate to all rights of which are set forth in leases of space in the Project as
of the date hereof, and in any “Intervening Lease”, as defined below, including any renewal, extension or expansion rights set
forth in such leases, regardless of whether such renewal, extension or expansion rights are executed strictly in accordance with
their terms, or pursuant to a lease amendment or a new lease (collectively, the “Superior Right Holders”) with respect to such
First Offer Space.
9.1.
Procedure for Offer. Prior to Landlord entering into any new lease of the First Offer Space (other than to
a Superior Right Holder) Landlord shall offer to lease to Tenant such First Offer Space (the “First Offer Notice”). If Landlord
intends to lease the First Offer Space as a part of a transaction including additional space, then the First Offer Notice shall include
such additional space as well as the First Offer Space. The First Offer Notice shall describe the space so offered to Tenant and
shall set forth the rent and other economic terms upon which Landlord is willing to lease such space to Tenant (the “First Offer
Rent”).
9.2.
Procedure for Acceptance. If Tenant wishes to exercise Tenant’s right of first offer with respect to the
space described in the First Offer Notice, then within ten (10) business days after delivery of the First Offer Notice to Tenant,
Tenant shall deliver notice to Landlord of Tenant’s election to exercise its right of first offer with respect to the entire space
described in the First Offer Notice on the terms contained in such notice. If Tenant does not so notify Landlord within the ten
(10) business day period, then Landlord shall be free to lease the space described in the First Offer Notice to anyone to whom
Landlord desires on any terms Landlord desires (any such lease to a third-party, an “Intervening Lease”). Notwithstanding
anything to the contrary contained herein, Tenant must elect to exercise its right of first offer, if at all, with respect to all of the
space offered by Landlord to Tenant at any particular time, and Tenant may not elect to lease only a portion thereof.
Notwithstanding the foregoing, (i) if Landlord has not entered into an Intervening Lease with a third party within nine (9) months
following the delivery by Landlord to Tenant of the First Offer Notice, then, so long as Landlord is not engaged in good faith
negotiations with a third party to lease all or a portion of such First Offer Space, the right of first offer granted to Tenant in this
Section 9 shall once again be invoked and (ii) in the event that within the nine (9) months following the delivery by Landlord to
Tenant of the First Offer Notice, Landlord markets or offers the First Offer Space to third parties on terms materially less
favorable to Landlord than those set forth in the First Offer Notice (it being understood and agreed that “materially less
favorable” shall mean that the net present value of the material economic terms of the modified transaction is at least ten percent
(10%) less than the net present value of the material economic terms set forth in the First Offer Notice), Landlord agrees that
Tenant’s rights under this Section 9 with respect to such First Offer Space shall be reinstated and Landlord shall provide Tenant
with a First Offer Notice if, as, and to the extent, required under the terms of this Section 9.
9.3.
Construction In First Offer Space. Tenant shall take the First Offer Space in its “as is” condition,
subject to any improvement allowance granted as a component of the First Offer Rent, and the construction of improvements in
the First Offer Space shall comply with the terms of Article 8 of the Lease.
8
9.4.
Amendment to Lease. If Tenant timely exercises Tenant’s right to lease the First Offer Space as set forth
herein, Landlord and Tenant shall promptly thereafter execute an amendment to this Lease adding such First Offer Space (and
any additional space) to the Premises upon the terms and conditions as set forth in the First Offer Notice and this Section 9.
Tenant shall commence payment of Rent for the First Offer Space, and the term of the First Offer Space shall commence upon
the date set forth in the First Offer Notice (the “First Offer Commencement Date”) and terminate on the date set forth in the
First Offer Notice.
9.5.
Termination of Right of First Offer. The rights contained in this Section 9 shall be personal to the
Original Tenant and any Permitted Transferee, and may only be exercised by the Original Tenant and any Permitted Transferee
(and not any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease) if the Original Tenant or
Permitted Transferee occupies the entire Premises, except for the New Sublease. Tenant shall not have the right to lease First
Offer Space, and Landlord shall not be required to deliver a First Offer Notice prior to leasing First Offer Space, if, as of the date
of the attempted exercise of any right of first offer by Tenant, or as of the date Landlord enters such lease, Tenant is in default
under the Lease beyond any applicable notice and cure periods set forth therein.
10.Brokers. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker
or agent in connection with the negotiation of this Seventh Amendment other than Jones Lang LaSalle and CBRE, Inc. (the
“Brokers”), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this
Seventh Amendment. Each party agrees to indemnify and defend the other party against and hold the other party harmless from
and against any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including, without
limitation, reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on
account of the indemnifying party’s dealings with any real estate broker or agent, other than the Brokers, occurring by, through,
or under the indemnifying party. Landlord shall pay the fees and commissions of the Brokers pursuant to a separate agreement.
The terms of this Section 10 shall survive the expiration or earlier termination of the term of the Lease, as hereby amended.
11.Parking. Effective as of the Fifth Expansion Commencement Date and continuing throughout the Fifth Expansion
Term, the parking ratio set forth in Section 9 of the Summary of the Original Lease shall also apply to the Fifth Expansion
Premises.
12.Signage. Effective as of the Fifth Expansion Commencement Date, the terms of Article 23 of the Original Lease shall
also apply to the Fifth Expansion Premises.
13.Letter of Credit; Increase of L-C Amount. The L-C currently held by Landlord is in the amount of $2,887,997.68.
In connection with this Seventh Amendment, Landlord and Tenant herby agree that the L-C Amount shall be increased to a new
total amount equal to $3,517,008.92 (the “New L-C Amount”). Accordingly, within fifteen (15) days following the Effective
Date, Tenant shall provide Landlord with either (i) a new L-C in such amended L-C Amount, which new L-C complies with the
requirements of the Lease and Landlord shall concurrently return the existing L-C, or (ii) an amendment to the L-C (in form and
content reasonably acceptable to Landlord) in order that the L-C, as amended, is in the New L-C Amount.
9
14.Sixth Amendment Modifications.
14.1. Sixth Amendment Delivery Date. As of the Effective Date, the third full sentence of Section 2 of the
Sixth Amendment is hereby deleted and replaced with the following:
“If, for any reason, Landlord is delayed in tendering possession of the Fourth Expansion Premises to
Tenant on the Delivery Date (as defined in the Tenant Work Letter), Landlord shall not be subject to
any liability for such failure, and the validity of this Lease shall not be impaired, but the dates set forth
in (i) and (ii) of the definition of the Fourth Expansion Commencement Date shall be extended by one
day for each day after the Delivery Date until Landlord tenders possession of the Fourth Expansion
Premises to Tenant. Notwithstanding the foregoing, in the event the Delivery Date actually causes a
delay in Tenant’s Fourth Expansion Commencement Date beyond June 1, 2025, Landlord shall also
provide Tenant with a day-for-day Base Rent credit applicable to the Fourth Expansion Premises only
for the number of delay days actually incurred by Tenant.”
14.2. Condition of Fourth Expansion Premises. As of the Effective Date, the reference to “Effective Date” in
the first full sentence of Section 6 of the Sixth Amendment is hereby deleted and replaced with “Delivery Date”.
14.3. Possession of the Fourth Expansion Premises. As of the Effective Date, Section 1 of Exhibit B of the
Sixth Amendment is hereby deleted and replaced with the following:
“Tenant acknowledges that Tenant has thoroughly examined the Fourth Expansion Premises. On
October 16, 2024 (the “Delivery Date”), Landlord shall tender possession of the Premises to Tenant in
its presently existing, “as-is” condition, subject to Section 6 of the Sixth Amendment. Except for the
payment of the Tenant Improvement Allowance as provided in Section 2, below, Landlord shall have
no obligation to make or pay for any improvements to the Fourth Expansion Premises.”
15.Notices. Pursuant to Section 29.18 of the Original Lease, Tenant’s address for notices under the Lease is:
Revolution Medicines, Inc.
700 Saginaw Drive
Redwood City, CA 94063
Attention: General Counsel
Email:
10
16.Generator. Tenant shall have the right to connect to and use the Emergency Generator (defined in the Sixth
Amendment) at the 500 Building with respect to its occupancy and use of the 600 Building, subject to all terms and conditions of
the Lease applicable thereto.
17.New Sublease. Landlord hereby confirms its consent to the New Sublease, provided that the Landlord Consent
Agreement is executed by all parties thereto. Contingent on the full execution and delivery of the New Sublease and the Landlord
Consent Agreement, Landlord hereby consents to the following, at Tenant’s sole cost and expense: (a) Sublessee’s connection to
and use of its prorata share of the Emergency Generator at the 500 Building; (b) Sublessee’s placement of its respective logo
and/or name in the common lobby of the Fifth Expansion Premises, subject to the terms and conditions of the Lease, including,
without limitation, Landlord’s prior written approval, said approval not to be unreasonably withheld; and (c) Tenant’s installation
of sub- or check-meters to measure Sublessee’s use of utilities. Notwithstanding anything to the contrary in Section 14.3 of the
Original Lease, no Transfer Premium shall be due in connection with the New Sublease.
18.Statutory Disclosure and Related Terms. Effective as of the Effective Date, the terms of Section 16 of the Sixth
Amendment shall also be deemed to apply to the Fifth Expansion Premises.
19.No Defaults. Tenant hereby represents and warrants to Landlord that, as of the date of this Seventh Amendment,
Tenant is in full compliance with all terms, covenants and conditions of the Lease, that Tenant knows of no breaches or defaults
under the Lease by Landlord or Tenant and that Tenant knows of no events or circumstances which, given the passage of time or
notice, would constitute a default under the Lease by either Landlord or Tenant. Landlord hereby represents and warrants to
Tenant that, as of the date of this Seventh Amendment, to Landlord’s actual knowledge, there are of no breaches or defaults
under the Lease by Landlord or Tenant.
20.Signatures. The parties hereto consent and agree that this Seventh Amendment may be signed and/or transmitted by
facsimile, e-mail of a .pdf document or using electronic signature technology (e.g., via DocuSign or similar electronic signature
technology), and that such signed electronic record shall be valid and as effective to bind the party so signing as a paper copy
bearing such party’s handwritten signature. The parties further consent and agree that (1) to the extent a party signs this Seventh
Amendment using electronic signature technology, by clicking “SIGN”, such party is signing this Seventh Amendment
electronically, and (2) the electronic signatures appearing on this Seventh Amendment shall be treated, for purposes of validity,
enforceability and admissibility, the same as handwritten signatures.
21.No Further Modification. Except as set forth in this Seventh Amendment, all of the terms and provisions of the
Lease shall apply with respect to the Fifth Expansion Premises and shall remain unmodified and in full force and effect.
[Signatures Follow]
11
IN WITNESS WHEREOF, this Seventh Amendment has been executed as of the day and year first above written.
12
LANDLORD:
HCP LS REDWOOD CITY, LLC,
a Delaware limited liability company
By: /s/Scott Bohn
Scott Bohn
Name:
13
TENANT:
REVOLUTION MEDICINES, INC.,
a Delaware corporation
By: /s/Mark A. Goldsmith
Mark A. Goldsmith
14
Its:
Chief Development Officer
Its:
Print Name
President and CEO
EXHIBIT A
OUTLINE OF FIFTH EXPANSION PREMISES
1
EXHIBIT B
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating to the initial improvement of the Fifth
Expansion Premises for Tenant following the date of this Seventh Amendment. This Tenant Work Letter is essentially organized
chronologically and addresses the issues of construction, in sequence, as such issues will arise during construction in the
Premises.
SECTION 1
POSSESSION OF THE PREMISES
Tenant acknowledges that Tenant has thoroughly examined the Fifth Expansion Premises. On the Fifth Expansion
Commencement Date, Landlord shall tender possession of the Premises to Tenant in its presently existing, “as-is” condition,
subject to Section 6 of the Seventh Amendment. Except for the payment of the Tenant Improvement Allowance as provided in
Section 2, below, Landlord shall have no obligation to make or pay for any improvements to the Fifth Expansion Premises.
SECTION 2
TENANT IMPROVEMENTS
2.1
Tenant Improvement Allowance. Commencing as of the Effective Date, Tenant shall be entitled to a
one-time tenant improvement allowance for the entire Premises in the amount of $2,330,650.00 (i.e., $10.00 per RSF of the entire
Premises) (the “Tenant Improvement Allowance”), for the costs relating to the initial designs and construction of Tenant’s
improvements, which are permanently affixed to the Premises or which are “Tenant Improvement Allowance Items,” as that term
is defined in Section 2.2.1, below (collectively, the “Tenant Improvements”). In no event shall Landlord be obligated to make
disbursements pursuant to this Tenant Work Letter or otherwise in connection with Tenant’s construction of the Tenant
Improvements or any Tenant Improvement Allowance Items, as defined below, in a total amount which exceeds the sum of the
Tenant Improvement Allowance. All Tenant Improvements for which the Tenant Improvement Allowance has been made
available shall be deemed Landlord’s property under the terms of the Lease; provided, however, Landlord may, by written notice
to Tenant given concurrently with Landlord’s approval of the “Final Working Drawings” for a phase of the Tenant Improvement
Work, as that term is defined in Section 3.3, below, require Tenant, prior to the end of the Lease Term, or given following any
earlier termination of this Lease, at Tenant’s expense, to remove any Tenant Improvements and to repair any damage to the
Premises and Building caused by such removal and return the affected portion of the Premises to a Building standard general
office condition. Tenant shall be entitled to deliver a space plan to Landlord to pre-approve in the future. Once such space plan is
approved by Landlord in writing, such space plan shall be attached hereto as Schedule 1 (“Plan”). So long as the Final Space
Plan, Final Working Drawings and corresponding Tenant Improvements are consistent with and a logical extension of the Plan,
Landlord shall not require Tenant, whether at the end of the Lease Term, or following any earlier termination of the Lease, to pay
for or remove any Tenant Improvements set forth on the Final Working Drawings, to repair any damage to the Fifth Expansion
Premises and 600 Building caused by such removal, or to return the affected portion of the Fifth Expansion Premises to the
condition in existence prior to the construction of the Tenant Improvements. Any
2
portion of the Tenant Improvement Allowance that is not disbursed or allocated for disbursement by December 31, 2028 (subject
to delays caused by Landlord), shall revert to Landlord and Tenant shall have no further rights with respect thereto.
Tenant may construct the Tenant Improvements in phases (e.g. with respect to other portions of the Premises). Each
phase may have its own set of Plans and Final Working Drawings. Landlord and Tenant shall follow the procedures and
requirements of this Tenant Work Letter with respect to each phase.
In addition, Tenant may, at its option, following the expiration or sooner termination of the New Sublease and
Sublessee’s surrender of possession to Tenant, convert the first floor of the 600 Building to office space (the “First Floor Office
Space”), subject to the procedures set forth in this Tenant Work Letter including, without limitation, Landlord’s approval of the
Final Working Drawings for the First Floor Office Space. Landlord shall not require Tenant, whether at the end of the Lease
Term, or following any earlier termination of the Lease, to pay for or remove any the First Floor Office Space set forth on the
approved plans therefor, to repair any damage to the Premises and Building caused by such removal, or to return the affected
portion of the Premises to the condition in existence prior to the construction of the First Floor Office Space.
2.2
Disbursement of the Tenant Improvement Allowance.
2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this Tenant Work Letter, the
Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively the “Tenant
Improvement Allowance Items”):
2.2.1.1Payment of all reasonable fees of the “Architect” and the “Engineers,” as those terms are defined
in Section 3.1 of this Tenant Work Letter, project management fees, and payment of the fees incurred by, and the cost of
documents and materials supplied by, Landlord and Landlord’s consultants in connection with the preparation and review of the
“Construction Drawings,” as that term is defined in Section 3.2 of this Tenant Work Letter;
2.2.1.2The payment of plan check, permit and license fees relating to construction of the Tenant
Improvements;
2.2.1.3The payment for all demolition and removal of existing improvements in the Premises;
2.2.1.4The cost of construction of the Tenant Improvements, including, without limitation, testing and
inspection costs, costs incurred for removal of existing furniture, fixtures or equipment in the Premises, hoisting and trash
removal costs, costs to purchase and install in the Premises equipment customarily incorporated into laboratory improvements or
laboratory utility systems, including, without limitation, UPS, DI Systems, boilers, air compressors, glass/cage washers and
autoclaves, painting, and contractors’ fees and general conditions (but not including any other unattached furniture, laboratory
equipment, or office equipment (“FF&E”), the costs of which FF&E shall not be paid for by the Tenant Improvement
Allowance);
3
2.2.1.5The cost of any changes in the Base Building when such changes are required by the
Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such
cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;
2.2.1.6The cost of any changes to the Construction Drawings or Tenant Improvements required by all
applicable building codes (the “Code”);
2.2.1.7Sales and use taxes;
2.2.1.8Subject to Section 2.2, above, all other actual out-of-pocket costs expended by Landlord in
connection with the construction of the Tenant Improvements, including, without limitation, costs expended by Landlord
pursuant to Section 4.1.1 of this Tenant Work Letter, below.
2.2.2 Disbursement of Tenant Improvement Allowance. During the construction of the Tenant
Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows.
2.2.2.1Monthly Disbursements. On or before the fifth (5th) day of each calendar month, during the
design and construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to
Landlord: (i) a request for reimbursement of amounts paid to the “Contractor,” as that term is defined in Section 4.1.1 of this
Tenant Work Letter, approved by Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of percentage of
completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of “Tenant’s Agents,” as that term is defined in Section 4.1.2 of this Tenant Work Letter, for
labor rendered and materials for the Premises; (iii) executed mechanic’s lien releases, as applicable, from all of Tenant’s Agents
which shall comply with the appropriate provisions, as reasonably determined by Landlord, of California Civil Code Sections
8132, 8134, 8136 and 8138; and (iv) all other information reasonably requested by Landlord. Tenant’s request for payment shall
be deemed Tenant’s acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant’s payment
request. Within forty-five (45) days thereafter, Landlord shall deliver a check to Tenant made payable to Tenant, or, if so directed
by Tenant, to the Contractor, in payment of the lesser of: (A) the amounts so requested by Tenant as set forth in this Section
2.2.3.1, above, less a ten percent (10%) retention to be retained unless Landmark Builders is the Contractor (the aggregate
amount of such retentions to be known as the “Final Retention”), and (B) the balance of any remaining available portion of the
Tenant Improvement Allowance if applicable (not including the Final Retention, provided that Landlord does not dispute any
request for payment based on non-compliance of any work with the “Approved Working Drawings,” as that term is defined in
Section 3.5 below, or due to any substandard work. Landlord’s payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied as set forth in Tenant’s payment request.
4
2.2.2.2Final Deliveries. Following the completion of construction of the Tenant Improvements, Tenant
shall deliver to Landlord (i) properly executed final mechanic’s lien releases in compliance with both California Civil Code
Section 8134 and either Section 8136 or Section 8138 from all of Tenant’s Agents, and a certificate certifying that the
construction of the Tenant Improvements in the Premises has been substantially completed, and (ii) a “close-out package” in such
customary format designated by Landlord (e.g., paper and/or electronic files) containing, without limitation, the following items
(to the extent deemed necessary by Landlord): (a) as-built drawings and final record CAD drawings, (b) warranties and
guarantees from all contractors, subcontractors and material suppliers, (c) all permits, approvals and other documents issued by
any governmental agency in connection with the Tenant Improvements, (d) an independent air balance report, if required due to
the nature of the Tenant Improvements, and (e) such other information or materials as may be reasonably requested by Landlord.
Tenant shall record a valid Notice of Completion in accordance with the requirements of Section 4.3 of this Tenant Work Letter.
2.2.2.3Other Terms. Landlord shall only be obligated to make disbursements from the Tenant
Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items. All Tenant
Improvement Allowance Items for which the Tenant Improvement Allowance have been made available shall be deemed
Landlord’s property under the terms of this Lease.
2.4 Building Standards. The quality of Tenant Improvements shall be in keeping with the existing
improvements in the Premises.
SECTION 3
CONSTRUCTION DRAWINGS
3.1
Selection of Architect. Tenant shall retain an architect/space planner (the “Architect”) approved in
advance by Landlord (which approval shall not be unreasonably withheld) to prepare the Final Space Plan and Final Working
Drawings as provided in Section 3.2 and 3.3, below. Tenant shall retain the engineering consultants or design/build
subcontractors designated by Tenant and reasonably approved in advance by Landlord (the “Engineers”) to prepare all plans and
engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work
in the Premises, which work is not part of the Base Building. All such plans and drawings shall comply with the drawing format
and specifications reasonably determined by Landlord, and shall be subject to Landlord’s reasonable approval. Tenant and
Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building plans,
and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection
therewith. Landlord’s review of any plans or drawings as set forth in this Section 3, shall be for its sole purpose and shall not
imply Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like
matters.
3.2
Final Space Plan. Tenant shall supply Landlord with pdf copies of its final space plan for the Premises,
digitally signed or acknowledged by Tenant, before any architectural working drawings or engineering drawings have been
commenced. The final space plan (the
5
“Final Space Plan”) shall include a layout and designation of all offices, labs, rooms and other partitioning, their intended use,
and equipment to be contained therein. Landlord may request clarification or more specific drawings for special use items not
included in the Final Space Plan. Landlord shall advise Tenant within five (5) business days after Landlord’s receipt of the Final
Space Plan for the Premises if the same is unsatisfactory or incomplete in any respect. If Tenant is so advised, Tenant shall
promptly cause the Final Space Plan to be revised to correct any deficiencies or other matters Landlord may reasonably require.
If Landlord fails to respond to the Final Space Plan within the five (5) business day period set forth above, Tenant may send
Landlord a reminder notice setting forth such failure containing the following sentence at the top of such notice in bold,
capitalized font at least twelve (12) points in size: “LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE WITHIN
THREE (3) BUSINESS DAYS SHALL RESULT IN LANDLORD’S DEEMED APPROVAL OF TENANT’S FINAL SPACE
PLAN” (the “Final Space Plan Reminder Notice”). Any such Final Space Plan Reminder Notice shall include a complete copy of
the Final Space Plan. If Landlord fails to respond within three (3) business days after receipt of a Final Space Plan Reminder
Notice, then the Final Space Plan shall be deemed approved by Landlord.
3.3
Final Working Drawings. After the Final Space Plan has been approved by Landlord, Tenant shall
supply the Engineers with a complete listing of standard and non-standard equipment and specifications, including, without
limitation, Title 24 calculations, electrical requirements and special electrical receptacle requirements for the Premises, to enable
the Engineers and the Architect to complete the “Final Working Drawings” (as that term is defined below) in the manner as set
forth below. Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and
the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully
coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is sufficiently
complete to allow all of Tenant’s Agents to bid on the work and to obtain all applicable permits (collectively, the “Final
Working Drawings”) and shall submit the same to Landlord for Landlord’s approval, which shall not be unreasonably withheld,
conditioned, or delayed. Tenant shall supply Landlord with CAD and pdf copies of such Final Working Drawings, digitally
signed or acknowledged by Tenant. Landlord shall advise Tenant within ten (10) business days after Landlord’s receipt of the
Final Working Drawings for the Premises if the same is unsatisfactory or incomplete in any respect. If Tenant is so advised,
Tenant shall promptly cause the Final Working Drawings to be revised in accordance with such review and any disapproval of
Landlord in connection therewith. If Landlord fails to respond to the Final Working Drawings within the ten (10) business day
period set forth above, Tenant may send Landlord a reminder notice setting forth such failure containing the following sentence
at the top of such notice in bold, capitalized font at least twelve (12) points in size: “LANDLORD’S FAILURE TO RESPOND
TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS SHALL RESULT IN LANDLORD’S DEEMED APPROVAL OF
TENANT’S FINAL WORKING DRAWINGS” (the “Final Working Drawings Reminder Notice”). Any such Final Working
Drawings Reminder Notice shall include a complete copy of the Final Working Drawings. If Landlord fails to respond within
five (5) business days after receipt of a Final Working Drawings Reminder Notice, then the Final Working Drawings shall be
deemed approved by Landlord.
3.4
Approved Working Drawings. The Final Working Drawings shall be approved by Landlord (the
“Approved Working Drawings”) prior to the commencement of construction of the Premises by Tenant. Concurrently with
Tenant’s delivery of the Final Working
6
Drawings to Landlord for Landlord’s approval, Tenant may submit the same to the appropriate municipal authorities for all
applicable building permits. Tenant hereby agrees that neither Landlord nor Landlord’s consultants shall be responsible for
obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant’s
responsibility; provided, however, that Landlord shall cooperate with Tenant in executing permit applications and performing
other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No changes,
modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord,
which shall not be unreasonably withheld, conditioned, or delayed.
3.5
Change Orders. If Tenant at any time desires any changes, alterations or additions to the Approved
Working Drawings, Tenant shall submit a detailed written request to Landlord and PMA (as defined in Section 4.1.1 below)
specifying such changes, alterations or additions (a “Tenant Change Request”), for Landlord’s approval. Landlord shall advise
Tenant within three (3) business days after Landlord’s receipt of a Tenant Change Request if the same is unsatisfactory or
incomplete in any respect. If Tenant is so advised, Tenant shall promptly cause the Tenant Change Request to be revised to
correct any deficiencies or other matters Landlord may reasonably require. If Landlord fails to respond to the Tenant Change
Request within the three (3) business day period set forth above, Tenant may send Landlord a reminder notice setting forth such
failure containing the following sentence at the top of such notice in bold, capitalized font at least twelve (12) points in size:
“LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE WITHIN THREE (3) BUSINESS DAYS SHALL RESULT IN
LANDLORD’S DEEMED APPROVAL OF A TENANT CHANGE REQUEST” (the “Change Request Reminder Notice”). Any
such Change Request Reminder Notice shall include a complete copy of the applicable Tenant Change Request. If Landlord fails
to respond within three (3) business days after receipt of a Change Request Reminder Notice, then the applicable Change Request
shall be deemed approved by Landlord.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1
Tenant’s Selection of Contractors.
4.1.1 The Contractor; Landlord’s Project Manager. Tenant shall retain a licensed general contractor,
approved in advance by Landlord, to construct the Tenant Improvements (“Contractor”). Landlord’s approval of the Contractor
shall not be unreasonably withheld. Landlord approves Landmark Builders as a Contractor. Landlord shall retain Project
Management Advisors, Inc. (“PMA”) as a third party project manager for construction oversight of the Tenant Improvements on
behalf of Landlord, and Tenant shall pay a fee to Landlord with respect to the PMA services equal to $1.89 per rentable square
foot of the Premises, which amount shall be deducted from the Tenant Improvement Allowance as incurred.
4.1.2 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers used by Tenant (such
subcontractors, laborers, materialmen, and suppliers, and the Contractor to be known collectively as “Tenant’s Agents”). The
subcontractors used by Tenant, but not any laborers, materialmen, and suppliers, must be approved in writing by Landlord, which
approval
7
shall not be unreasonably withheld, conditioned, or delayed; provided, however, Landlord may nevertheless designate and
require the use of particular mechanical, engineering, plumbing, fire life-safety and other Base Building subcontractors. If
Landlord does not approve any of Tenant’s proposed subcontractors, Tenant shall submit other proposed subcontractors for
Landlord’s written approval.
4.2
Construction of Tenant Improvements by Tenant’s Agents.
4.2.1 Construction Contract; Cost Budget.
Tenant shall engage the Contractor under a commercially reasonable and customary construction contract,
reasonably approved by Landlord (collectively, the “Contract”). Prior to the commencement of the construction of the Tenant
Improvements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a
detailed breakdown, by trade, of the final costs to be incurred or which have been incurred, as set forth more particularly in
Sections 2.2.1.1 through 2.2.1.10, above, in connection with the design and construction of the Tenant Improvements to be
performed by or at the direction of Tenant or the Contractor, which costs form a basis for the estimated total costs of the work of
the Tenant Improvement project (the “Final Budget”). If the Final Budget exceeds the amount of the Tenant Improvement
Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or
before the commencement of construction of the Tenant Improvements)(the “Over-Allowance Amount”), then Tenant shall pay
such Over-Allowance Amount after the Tenant Improvement Allowance has been disbursed in full (less any Final Retention). In
the event that the costs relating to the design and construction of the Tenant Improvements shall be in excess of the estimated
amount as set forth in the Final Costs, any such excess shall be paid by Tenant out of its own funds, but Tenant shall continue to
provide Landlord with the documents described in Sections 2.2.2.1 (i), (ii), (iii) and (iv) of this Tenant Work Letter, above, for
Landlord’s approval, prior to Tenant paying such costs.
4.2.2 Tenant’s Agents.
4.2.2.1Compliance with Drawings and Schedule. Tenant’s and Tenant’s Agent’s construction of the
Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in strict accordance
with the Approved Working Drawings; and (ii) Tenant’s Agents shall submit schedules of all work relating to the Tenant’s
Improvements to Contractor and Contractor shall, within five (5) business days of receipt thereof, inform Tenant’s Agents of any
changes which are necessary thereto, and Tenant’s Agents shall adhere to such corrected schedule.
4.2.2.2Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease shall also apply with
respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or
Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant’s non-payment of any
amount arising out of the Tenant Improvements and/or Tenant’s disapproval of all or any portion of any request for payment.
Such indemnity by Tenant, as set forth in this Lease, shall also apply with respect to any and all costs, losses, damages, injuries
and liabilities related in any way to Landlord’s performance of any ministerial acts reasonably necessary (i) to permit Tenant to
8
complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the
Premises. The foregoing indemnity shall not apply to claims caused by the gross negligence or willful misconduct of Landlord,
its member partners, shareholders, officers, directors, agents, employees, and/or contractors.
4.2.2.2Requirements of Tenant’s Agents. Each of Tenant’s Agents shall guarantee to Tenant and for
the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the date of substantial completion of the work under
the Contract (“Substantial Completion”). Each of Tenant’s Agents shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year
after Substantial Completion. The correction of such work shall include, without additional charge, all additional expenses and
damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements, and/or the
Building and/or common areas that may be damaged or disturbed thereby. All such warranties or guarantees as to materials or
workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written
such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may
appear, and can be directly enforced by either. Tenant covenants to give to Landlord any assignment or other assurances which
may be necessary to effect such right of direct enforcement.
4.2.2.3Insurance Requirements.
4.2.2.3.1General Coverages. All of Tenant’s Agents shall carry the following
insurance with insurers having a minimum A.M. best rating of A- VIII or better (i) worker’s compensation insurance covering all
of Tenant’s Agents’ respective employees with a waiver of subrogation in favor of Landlord and the property manager, (ii)
general liability insurance with a limit of not less than $1,000,000 per occurrence and $2,000,000 general aggregate, including
products/completed operations and contractual coverage, and shall name Landlord, its subsidiaries and affiliates, its property
manager (if any) and any other party the Landlord so specifies, as an additional insured or loss payee, as applicable, including
Landlord’s managing agent, if any, and (iii) if the cost of such Tenant Improvements exceeds $100,000 in the aggregate, then
Builders Risk insurance covering the construction of the Tenant Improvements, and such policy shall include Landlord as an
additional insured.
4.2.2.3.2General Terms. Certificates for all insurance carried pursuant to this Section
4.2.2.3 shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before the
Contractor’s equipment is moved onto the site. All such policies of insurance must contain a provision that the company writing
said policy will endeavor to give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or
any reduction in the amounts of such insurance. In the event that the Tenant Improvements are damaged by any cause during the
course of the construction thereof, Tenant shall immediately repair the same at Tenant’s sole cost and expense. Tenant’s Agents
shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed, except for any
Products and Completed Operation Coverage insurance required by Landlord, which is to be maintained for ten (10) years
following completion of the work. Such insurance shall provide that it is primary insurance as respects the owner and
9
that any other insurance maintained by owner is excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under
Section 4.2.2.2 of this Tenant Work Letter.
4.2.2 Governmental Compliance. The Tenant Improvements shall comply in all respects with the following:
(i) all state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the
rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical Code; and
(iii) building material manufacturer’s specifications.
4.2.4 Inspection by Landlord. Landlord shall have the right to inspect the Tenant Improvements at all times,
provided however, that Landlord’s failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of
Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute Landlord’s approval of the
same. Should Landlord reasonably disapprove any portion of the Tenant Improvements, on the grounds that the construction is
defective or fails to comply with the Approved Working Drawings, Landlord shall notify Tenant in writing of such disapproval
and shall specify the items disapproved. Any such defects or deviations shall be rectified by Tenant at no expense to Landlord,
provided however, that in the event Landlord determines that a defect or deviation exists that might adversely affect the
mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or
exterior appearance of the Building or any other tenant’s use of such other tenant’s leased premises, Landlord may, take such
action as Landlord reasonably deems necessary, at Tenant’s expense and without incurring any liability on Landlord’s part, to
correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the
construction of the Tenant Improvements until such time as the defect, deviation and/or matter is corrected to Landlord’s
reasonable satisfaction.
4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold weekly meetings at a
reasonable time, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and
the construction of the Tenant Improvements, and Landlord and/or its agents shall receive prior notice of, and shall have the right
to attend, all such meetings, and, upon Landlord’s request, certain of Tenant’s Agents shall attend such meetings. In addition,
minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord. One such meeting
each month shall include the review of Contractor’s current request for payment.
4.3
Notice of Completion; Copy of Record Set of Plans. Within ten (10) days after completion of
construction of the Tenant Improvements, Tenant shall cause a valid Notice of Completion to be recorded in the office of the
Recorder of the county in which the Building is located in accordance with Section 8182 of the Civil Code of the State of
California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so,
Landlord may execute and file the same on behalf of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and
expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (w) to update the Approved
Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of
construction, (x) to certify to the best of their knowledge that the “record-set” of as-built drawings are true and
10
correct, which certification shall survive the expiration or termination of this Lease, (y) to deliver to Landlord two (2) sets of
copies of such record set of drawings (consisting of the applicable CAD files) within ninety (90) days following issuance of a
certificate of occupancy for the Premises, and (z) deliver to Landlord a permit card with all required final signoffs from the
applicable governmental agencies, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating
manuals and information relating to the improvements, equipment, and systems in the Premises. Within fifteen (15) days after
request by Tenant following the Substantial Completion of the Tenant Improvements, Landlord will acknowledge its approval of
the Tenant Improvements (provided that such approval has been granted) by placing its signature on a Contractor’s Certificate of
Substantial Completion fully executed by the Architect, Contractor and Tenant. Landlord’s approval shall not create any
contingent liabilities for Landlord with respect to any latent quality, design, Code compliance or other like matters that may arise
subsequent to Landlord’s approval.
SECTION 5
MISCELLANEOUS
5.1
Tenant’s Representative. Tenant has designated Camilo Pascua as its sole representatives with respect to
the matters set forth in this Tenant Work Letter, who shall each have full authority and responsibility to act on behalf of the
Tenant as required in this Tenant Work Letter.
5.2
Landlord’s Representative. Landlord has designated Bernie Baker with PMA, as its sole representative
with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.
5.3
Time is of the Essence in This Tenant Work Letter. Unless otherwise indicated, all references herein to
a “number of days” shall mean and refer to calendar days. If any item requiring approval is timely disapproved by Landlord, the
procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.
5.4
Tenant’s Lease Default. Notwithstanding any provision to the contrary contained in the Lease or this
Tenant Work Letter, upon any Event of Default by Tenant under the Lease or this Tenant Work Letter (including, without
limitation, any failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time on or before the
substantial completion of the Tenant Improvements and such default remains uncured ten (10) days following Landlord’s notice
of such default to Tenant, then in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord
shall have the right to withhold payment of all or any portion of the Tenant Improvement Allowance and/or Landlord may,
without any liability whatsoever, cause the cessation of construction of the Tenant Improvements and cessation of any work
required to be performed by Landlord pursuant to this Tenant Work Letter (in which case, Tenant shall be responsible for any
delay and any costs occasioned thereby).
11
SCHEDULE 1 TO EXHIBIT B APPROVED PLAN
[TO BE ATTACHED ONCE LANDLORD APPROVES SPACE PLAN AS DESCRIBED IN SECTION 2.1 OF
EXHIBIT B]
1
Exhibit 10.2J
SUBLEASE
(Redwood City, California)
THIS SUBLEASE (this “Sublease”) is entered into as of November 5, 2024 (the “Effective Date”), by and between
REVOLUTION MEDICINES, INC., a Delaware corporation (“Sublandlord”), and EDITCO BIO INC., a Delaware corporation
(“Subtenant”). Sublandlord and Subtenant may each be referred to herein as a “Party”, and collectively, the “Parties”.
RECITALS
This Sublease is made with reference to the following recitals of essential facts:
A. Sublandlord, as tenant, and HCP LS REDWOOD CITY, LLC, a Delaware limited liability company (“Master Landlord”), as
landlord, are parties to that certain Lease dated January 15, 2015 (the “Original Lease”), as amended by that certain First Amendment to
Lease dated September 16, 2016 (the “First Amendment”), that certain Second Amendment to Lease dated April 17, 2020 (the “Second
Amendment”), that certain Third Amendment to Lease dated November 1, 2021 (the “Third Amendment”), that certain Fourth
Amendment to Lease dated March 24, 2023 (the “Fourth Amendment”), that certain Fifth Amendment to Lease dated August 3, 2023 (the
“Fifth Amendment”), and that certain Sixth Amendment to Lease dated July 12, 2024 (the “Sixth Amendment”) (collectively, as amended,
and as may be further amended, the “Master Lease”), a copy of which has been previously provided to Subtenant, for space located at 300,
700, 800 and 900 Saginaw Drive, Redwood City, California (the “Existing Premises”).
B. If and when that certain Seventh Amendment to Lease (the “Seventh Amendment”) is fully executed and delivered by
Sublandlord and Master Landlord pursuant to Section 34.1 of this Sublease, Sublandlord will lease, among other space leased by Sublandlord
pursuant to the Master Lease, all of the building commonly known as 600 Saginaw Drive, Redwood City, California (the “Building”),
containing approximately 46,961 rentable square feet, as more particularly described in the Seventh Amendment (the “Seventh Amendment
Premises” and, together with the Existing Premises, the “Master Premises”), which Building is part of the Britannia Seaport Centre campus,
as further described in the Master Lease (the “Project”), and the Seventh Amendment will be part of the Master Lease.
C. Subject to the terms and conditions of this Sublease, including, without limitation, the mutual execution and delivery of the
Seventh Amendment by Sublandlord and Subtenant, Sublandlord desires to sublease to Subtenant, and Subtenant desires to sublease from
Sublandlord, that certain portion of the Seventh Amendment Premises comprising approximately 23,481 rentable square feet, located on the
first (1st) floor of the Building, as depicted in Exhibit A attached hereto (the “Subleased Premises”).
D. Sublandlord may continue to lease and/or occupy that portion of the Master Premises which does not contain the Subleased
Premises (the “Reserved Premises”) during the Sublease Term (as defined in Section 3).
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
2
AGREEMENT
1. RECITALS; CAPITALIZED TERMS. The foregoing recitals are hereby incorporated into this Sublease by this reference as if fully
set forth herein. Capitalized terms used, but not defined, herein have the meanings set forth in the Master Lease.
2. SUBLEASED PREMISES. Sublandlord hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord, the
Subleased Premises. Additionally, Subtenant is hereby granted the nonexclusive right to use (a) the IDF Room (as defined in Section 32), and
(b) the common areas of the Building and Project to the extent of Sublandlord’s rights to use of the same pursuant to the Master Lease, in
common with Sublandlord and other tenants in the Project (collectively, the “Common Areas”), each throughout the Sublease Term (as
defined in Section 3). Subtenant covenants that its use of the Subleased Premises and Common Areas shall at all times comply with any and
all terms, conditions and provisions of the Master Lease and with any rules and regulations established by Master Landlord or Sublandlord
from time to time.
3. Sublease Term.
3.1.
Commencement and Expiration Dates. The term of this Sublease (the “Sublease Term”) shall be for three (3) years
and shall commence upon the occurrence of both: (a) the mutual execution and delivery of the Seventh Amendment by Sublandlord and
Master Lease pursuant to Section 34.1, and (b) Sublandlord’s receipt of the Landlord Consent (as defined in Section 34.2) (the date both such
conditions are satisfied, the “Commencement Date”). Unless earlier terminated under any provision of the Master Lease or this Sublease,
the Sublease Term shall continue until 11:59 Pacific time on the date which is the three (3)-year anniversary of the Commencement Date (the
“Expiration Date”).
3.2.
Conditions to Delivery of Possession. Sublandlord shall deliver possession of the Subleased Premises to Subtenant
upon the occurrence of all of the following: (a) the mutual execution and delivery of the Seventh Amendment by Sublandlord and Master
Lease, (b) Sublandlord’s receipt of the Landlord Consent, (c) Sublandlord’s receipt of the first full month’s Rent (as defined in Section 6),
plus Rent for any partial month in which the Commencement Date occurs (if the Commencement Date does not fall on the first day of a
month), (d) Sublandlord’s receipt of the L/C Security (as defined in Section 8), (e) Sublandlord’s receipt of evidence that Subtenant carries
the insurance required by the Master Lease and this Sublease, and (f) if Subtenant intends to use Hazardous Materials in the Subleased
Premises, Subtenant shall have completed, and Master Landlord shall have approved, the Environmental Questionnaire attached as Exhibit E
to the Master Lease.
3.3.
Confirmation of Dates. At any time during the Sublease Term, Sublandlord may deliver to Subtenant a notice in the
form as set forth in Exhibit B, attached hereto, as a confirmation only of the information set forth therein, which Subtenant shall execute and
return to Sublandlord within five (5) business days of receipt thereof; provided, that if such notice is not factually correct, then Subtenant
shall make such changes as are necessary to make such notice factually correct and shall thereafter return such notice to Sublandlord within
said five (5) business day period.
4. BASE RENT. Beginning on the Commencement Date, Subtenant shall pay base rent to Sublandlord in the following amounts
during the following periods (each payment, a monthly installment of “Base Rent”):
3
Months of Lease Term
Monthly Installment of Base Rent
Monthly Base Rental Per Rentable Square Foot
1*-3
$300,661.57
$12.80
4-9
$203,217.50
$8.65
10-12
$212,836.66
$9.07
13-21
$209,426.11
$8.92
22-24
$219,381.93
$9.34
25-33
$215,852.02
$9.19
34-36
$226,156.30
$9.63
*If the Commencement Date does not fall on the first day of the month, “Month 1” shall be the first full calendar month of the Lease term
plus any partial calendar month in which the Commencement Date occurs. In the event “Month 1” is deemed to include such partial calendar
month, Subtenant shall pay the prorated amount of the monthly installment of Base Rent due for such partial calendar month upon
Subtenant’s execution of this Sublease.
5. Direct Expenses and Other Reimbursements.
5.1.
Direct Expenses Reimbursement. In addition to paying Base Rent, beginning on the Commencement Date,
Subtenant shall pay to Sublandlord, as additional rent, Subtenant’s Share of Direct Expenses on a monthly basis throughout the Sublease
Term. As used in this Sublease, “Subtenant’s Share of Direct Expenses” means an amount which equals (a) fifty percent (50%)
(“Subtenant’s Share”), multiplied by (b) the Direct Expenses attributable to the Seventh Amendment Premises payable by Sublandlord to
Master Landlord pursuant to Article 4 of the Master Lease. Sublandlord shall promptly forward to Subtenant all Statements and Estimated
Statements (as each term is defined in the Master Lease) for the Seventh Amendment Premises that Sublandlord receives from Master
Landlord. Subtenant shall pay an estimated amount of Subtenant’s Share of Direct Expenses in the same manner as required of the “Tenant”
under Section 4.4 of the Master Lease. If Sublandlord receives a credit for overpayment of Direct Expenses attributable to the Seventh
Amendment Premises (a “Direct Expense Credit”) pursuant to Section 4.4.1 of the Master Lease, Subtenant shall receive a credit against the
next installment of Rent due under this Sublease in an amount equal to Subtenant’s Share multiplied by the total Direct Expense Credit or, if
the Sublease Term has ended, Sublandlord shall pay such amount to Subtenant within thirty (30) days of Sublandlord’s receipt of the Direct
Expense Credit. If Sublandlord makes a payment to Master Landlord due to an underpayment of Direct Expenses attributable to the Seventh
Amendment Premises (a “Direct Expense Shortfall”) pursuant to Section 4.4.1 of the Master Lease, Subtenant shall pay Sublandlord an
amount equal to Subtenant’s Share multiplied by the total Direct Expense Shortfall together with the next installment of Rent due or, if the
Sublease Term has ended, Subtenant shall pay such amount to Sublandlord within thirty (30) days of Subtenant’s receipt of an invoice
therefor.
5.2.
Other Expense Reimbursements. Notwithstanding anything in this Sublease to the contrary, Subtenant shall pay to
Sublandlord, together with its payment of Subtenant’s Share of Direct Expenses, 100% of the cost of: (a) any charges that apply solely to the
Subleased Premises (e.g., real estate taxes on leasehold improvements therein), (b) late fees or penalties assessed against Sublandlord or
Master Landlord as a result of Subtenant’s acts or omissions, (c) charges incurred as a result of excess or additional services provided by
Master Landlord specifically requested by Subtenant for the Subleased Premises, or for the Master Premises without Sublandlord’s consent,
(d) Subtenant’s Share of the cost of the Sublandlord Utilities (as defined in Section 13)(e) Subtenant’s Share of all costs and expenses
incurred by Sublandlord
4
for maintenance and repair of the Common Areas of the Building, the Building Systems (as defined in the Master Lease) and any other
shared Building elements, (f) Subtenant’s prorata share of all costs and expenses incurred by Sublandlord for maintenance and repair of the
emergency power generator located at the building known as 500 Saginaw Drive (the “500 Generator”), which 500 Generator also serves
the Building (see Section 33), and (f) Subtenant’s Share of any other out-of-pocket costs and expenses incurred by Sublandlord under the
Master Lease which are for the mutual benefit of Sublandlord and Subtenant.
6. PAYMENT OF RENT. Base Rent, Subtenant’s Share of Direct Expenses, other reimbursements paid by Subtenant pursuant to
Section 5 and any other amounts payable by Subtenant in connection with this Sublease are referred to in this Sublease as “Rent”. Except as
otherwise expressly set forth in this Sublease, Rent shall be due and payable to Sublandlord without prior written notice or demand, in
advance, without deduction or offset, in lawful money of the United States of America, on or before the first day of each calendar month
during the Sublease Term. Rent shall be payable at Sublandlord’s address set forth herein, at such other place as Sublandlord may designate
in writing to Subtenant, or pursuant to written electronic payment instructions delivered by Sublandlord to Subtenant. Rent for any period
during this Sublease Term that is less than one (1) month shall be prorated based on a thirty (30) day month. Subtenant shall pay Rent for the
first full month of the Sublease Term, plus Rent for any partial month in which the Commencement Date occurs (if the Commencement Date
does not fall on the first day of a month), upon Subtenant’s execution of this Sublease.
7. Delinquent Payments.
7.1.
Late Fee. Subtenant acknowledges that Subtenant’s late payment of Rent will cause Sublandlord to incur costs not
contemplated by this Sublease, the exact amount of such costs being difficult and impractical to fix. Such other costs include, without
limitation, processing, administrative and accounting charges and late charges that may be imposed on Sublandlord. Accordingly, if
Sublandlord does not receive a monthly installment of Rent within five (5) days of its due date, Subtenant shall pay to Sublandlord an
additional sum of ten percent (10%) of the delinquent amount as a late charge, but in no event more than the maximum late charge allowed
by law. The Parties agree that this late charge represents a fair and reasonable estimate of the costs that Sublandlord will incur due to
Subtenant’s late payment of Rent. Sublandlord’s acceptance of a late charge will not constitute a waiver of Subtenant’s default with respect
to the delinquent amount or prevent Sublandlord from exercising any of the other rights and remedies available to Sublandlord under this
Sublease or under applicable law.
7.2.
Interest. In addition to the late charges referred to above, if Sublandlord does not receive a monthly installment of
Rent within five (5) days of its due date, the delinquent amount will bear interest from the date due until paid to Sublandlord by Subtenant at
the rate of fifteen percent (15%) per annum or the maximum rate that Sublandlord may charge to Subtenant under applicable law, whichever
is less. Sublandlord’s acceptance of interest payments will not constitute a waiver of Subtenant’s default with respect to the delinquent
amount or prevent Sublandlord from exercising any of the other rights and remedies available to Sublandlord under this Sublease or under
applicable law.
8. Letter of Credit.
Prior to the Commencement Date, Subtenant shall deliver a letter of credit (the “L/C Security”) to Sublandlord, naming Sublandlord as
beneficiary, with a face amount of Eight Hundred Ninety-Four Thousand Three Hundred Twenty and 92/100 ($894,320.92) (the “L/C
Amount”), which Sublandlord will hold as security for Subtenant’s faithful performance of all of the terms, covenants and conditions of this
Sublease to be kept and performed by Subtenant during the period commencing on the Effective Date and
5
ending upon the expiration or termination of Subtenant’s obligations under this Sublease, in accordance with the following:
8.1.
Form of Letter of Credit. Prior to the Commencement Date, Subtenant shall provide to Sublandlord, and maintain
in full force and effect throughout the Term and until the date that is three (3) months after the then-current Expiration Date, a letter of credit
in a form reasonably approved by Sublandlord, issued by an issuer reasonably satisfactory to Sublandlord, in the L/C Amount, with an initial
term of at least one year, allow partial draws and be "callable" at sight, irrevocable and unconditional. Subtenant shall pay all expenses,
points and/or fees incurred by Subtenant in obtaining the L/C Security.
Sublandlord may require the L/C Security to be re-issued by a different issuer at any time during the Term if Sublandlord reasonably believes
that the issuing bank of the L/C Security is or may soon become insolvent; provided, however, Sublandlord shall return the existing L/C
Security to the existing issuer immediately upon receipt of the substitute L/C Security. If any issuer of the L/C Security shall become
insolvent or placed into FDIC receivership, then Subtenant shall immediately deliver to Sublandlord (without the requirement of notice from
Sublandlord) substitute L/C Security issued by an issuer reasonably satisfactory to Sublandlord, and otherwise conforming to the
requirements set forth in this Section 8.1. As used herein with respect to the issuer of the L/C Security, “insolvent” means the determination
of insolvency as made by such issuer’s primary bank regulator (i.e., the state bank supervisor for state chartered banks; the OCC or OTS,
respectively, for federally chartered banks or thrifts; or the Federal Reserve for its member banks). Subtenant shall reimburse Sublandlord’s
legal costs (as estimated by Sublandlord’s counsel) in handling Sublandlord’s acceptance of L/C Security or its replacement or extension.
8.2.
Drawings. If an Event of Default occurs under this Sublease, Sublandlord may draw upon the L/C Security, and
hold, use, apply or retain all or any part of the proceeds of such draw for the payment of any Rent or any other sum in default, or to
compensate Sublandlord for any other loss or damage that Sublandlord may suffer by reason of Subtenant’s default (provided, however, that,
with respect to any default that does not become an Event of Default until after the giving of notice, Sublandlord shall not be required to send
a notice of default and may immediately draw on the entire L/C Security in the event any of the following events (i) through (ix) occurs or
Sublandlord is otherwise prohibited from sending such notice pursuant to the Bankruptcy Code or other applicable law), and Sublandlord
may, in addition, draw upon the L/C Security if (i) as of the date that is forty-five (45) days before any L/C Security expires (even if such
scheduled expiry date is after the Expiration Date) Subtenant has not delivered to Sublandlord an amendment or replacement for such L/C
Security, reasonably satisfactory to Sublandlord, extending the expiry date to the earlier of (1) three (3) months after the then-current
Expiration Date or (2) the date that is one year after the then-current expiry date of the L/C Security, (ii) the L/C Security provides for
automatic renewals, Sublandlord asks the issuer to confirm the current L/C Security expiry date, and the issuer fails to do so within ten (10)
business days, (iii) Subtenant fails to pay (when and as Sublandlord reasonably requires) any bank charges for Sublandlord’s transfer of the
L/C Security, (iv) the issuer of the L/C Security ceases, or announces that it will cease, to maintain an office in the city where Sublandlord
may present drafts under the L/C Security (and fails to permit drawing upon the L/C Security by overnight courier), (v) Subtenant has filed a
voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy Code”), (vi) an involuntary
petition has been filed against Subtenant under the Bankruptcy Code, (vii) the Sublease has been rejected, or is deemed rejected, under
Section 365 of the U.S. Bankruptcy Code, following the filing of a voluntary petition by Subtenant under the Bankruptcy Code, or the filing
of an involuntary petition against Subtenant under the Bankruptcy Code, (xiii) Subtenant is placed into receivership or conservatorship, or
becomes subject to similar proceedings under federal or state laws, or Subtenant executes an assignment for the benefit of creditors, or (ix)
Subtenant fails to replace the L/C Security when required by Section 8.2.1. If the L/C Security is drawn upon by Sublandlord, Subtenant
shall, within ten (10) days following demand therefor, deliver to Sublandlord replacement L/C Security in compliance with Section 8.1, in an
amount sufficient to restore the L/C Security to the full L/C Amount,
6
and Subtenant’s failure to do so shall be a material breach of this Lease. This Section 8.2.3 does not limit any other provisions of this
Sublease allowing Sublandlord to draw the L/C Security under specified circumstances.
8.3.
Wrongful Draw. Subtenant shall not seek to enjoin, prevent, or otherwise interfere with Sublandlord’s draw under
L/C Security. Subtenant acknowledges that the only effect of a wrongful draw would be to substitute a cash security deposit for L/C Security,
causing Subtenant no legally recognizable damage. Sublandlord shall hold the proceeds of any draw in the same manner and for the same
purposes as a cash security deposit. In the event of a wrongful draw, the parties shall cooperate to allow Subtenant to post replacement L/C
Security simultaneously with the return to Subtenant of the wrongfully drawn sums, and Sublandlord shall upon request confirm in writing to
the issuer of the L/C Security that Sublandlord’s draw was erroneous.
8.4.
Transfers of Interest; Changes in Amounts. If Sublandlord transfers its interest in the Subleased Premises, then
Subtenant shall at Subtenant’s expense, within five (5) business days after receiving a request from Sublandlord, deliver (and, if the issuer
requires, Sublandlord shall consent to) an amendment to the L/C Security naming Sublandlord’s grantee as substitute beneficiary. If the
required L/C Amount changes while L/C Security is in force, then Subtenant shall deliver (and, if the issuer requires, Sublandlord shall
consent to) a corresponding amendment to the L/C Security.
8.5.
Security Deposit Laws. Sublandlord and Subtenant (i) acknowledge and agree that in no event or circumstance shall
the L/C Security or any renewal thereof or substitute therefor or any proceeds thereof be deemed to be or treated as a “security deposit” under
any laws applicable to security deposits in the commercial context, including, but not limited to, Section 1950.7 of the California Civil Code,
as such Section now exists or as it may be hereafter amended or succeeded (the "Security Deposit Laws"), (ii) acknowledge and agree that
the L/C Security (including any renewal thereof or substitute therefor or any proceeds thereof) is not intended to serve as a security deposit,
and the Security Deposit Laws shall have no applicability or relevancy thereto, and (iii) waive any and all rights, duties and obligations that
any such party may now, or in the future will, have relating to or arising from the Security Deposit Laws. Subtenant hereby irrevocably
waives and relinquishes the provisions of Section 1950.7 of the California Civil Code and any successor statute, and all other provisions of
law, now or hereafter in effect, which (x) establish the time frame by which a landlord must refund a security deposit under a lease, and/or (y)
provide that a landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to
repair damage caused by a tenant or to clean the premises, it being agreed that Sublandlord may, in addition to the amounts specified in
Section 8.2 above, claim those sums reasonably necessary to (a) compensate Sublandlord for any loss or damage caused by Subtenant’s
breach of this Sublease, including any damages Sublandlord suffers following termination of this Sublease, and/or (b) compensate
Sublandlord for any and all damages arising out of, or incurred in connection with, the termination of this Sublease, including, without
limitation, those specifically identified in Section 1951.2 of the California Civil Code.
8.6.
Survival. The provisions of this Section 8 shall survive the expiration or earlier termination of this Sublease.
9. CONDITION OF SUBLEASED PREMISES. Subtenant (a) acknowledges that Subtenant has conducted a thorough inspection of the
Subleased Premises and (b) agrees that the Subleased Premises are in good condition and repair and Subtenant accepts the Subleased
Premises in their current “as is” condition with all faults. Subtenant hereby waives all warranties, whether express or implied (including
warranties of merchantability or fitness for a particular purpose), with respect to the Subleased Premises. Except as expressly set forth in this
Sublease, Sublandlord makes no representation or warranty of any kind with respect to the Subleased Premises, and Subtenant shall have full
responsibility for making any desired
7
repairs, installations, alterations or additions to the Subleased Premises. Any installations, alterations or additions which Subtenant desires to
make to the Subleased Premises shall be subject to the prior written approval of both Master Landlord and Sublandlord and shall otherwise
be constructed in accordance with all of the terms and conditions of the Master Lease, including, without limitation, Article 8 thereof.
10.USE. Subtenant may use the Subleased Premises solely for the uses permissible under Article 5 of the Master Lease, and for no
other use. Subtenant’s use of the Subleased Premises must at all times comply with the requirements of the Master Lease, and Subtenant shall
not use the Subleased Premises in a manner that is in any way inconsistent with the Master Lease or in any way that disturbs Sublandlord’s
use of the Reserved Premises or that might cause Sublandlord to be in breach of the Master Lease. Subtenant shall not commit or allow to be
committed any waste upon the Project, Building or Subleased Premises, or any public or private nuisance or act which is unlawful. Subtenant
shall not commit any act that will increase the then existing rate of insurance on the Project, Building or the Master Premises. Subtenant shall
promptly pay upon demand the amount of any such increase in insurance rates caused by any act of Subtenant.
11.COMPLIANCE WITH LAWS. Subtenant shall, at its sole cost and expense, promptly comply with all laws, ordinances and
regulations with respect to Subtenant’s use, occupancy or improvement of the Subleased Premises, including, without limitation, the
Americans With Disabilities Act of 1990, 42 U.S.C. §12101, et seq. (as amended, together with the regulations promulgated pursuant thereto)
(collectively, “Applicable Laws”). Subtenant shall be responsible, at its sole cost and expense, to reimburse Sublandlord for any legal
compliance costs incurred by Sublandlord with respect to the Subleased Premises as a result of Subtenant’s (a) specific use and occupancy of
the Subleased Premises (as opposed to general office and research and development use), (b) obtaining any permit or license with respect to
the Subleased Premises, or (c) making any installations, additions or alterations to the Subleased Premises.
12.Compliance with Master Lease.
12.1. Subtenant Covenants. Subtenant covenants that it will occupy the Subleased Premises in accordance with all of the
terms and conditions of the Master Lease as they apply to the Subleased Premises and will not suffer to be done or omit to do any act which
may result in a violation of or a default under any of the terms and conditions of the Master Lease, or render Sublandlord liable for any
damage, charge or expense thereunder. Subtenant further covenants and agrees to indemnify Sublandlord against and hold Sublandlord
harmless from any claim, demand, action, proceeding, suit, liability, loss, judgment, expense (including reasonable attorneys’ fees) and
damages of any kind or nature whatsoever (collectively, “Claims”) arising out of, by reason of, or resulting from, Subtenant’s failure to
perform or observe any of the terms and conditions of the Master Lease applicable to the Subleased Premises or this Sublease.
12.2. Sublandlord Covenants. Sublandlord covenants that it will maintain the Master Lease during the entire Sublease
Term, subject, however, to any earlier termination of the Master Lease without the fault of Sublandlord, and to comply with or perform or
cause to be performed Sublandlord’s obligations with respect to the Reserved Premises and with any obligations with respect to the
Subleased Premises not assumed by Subtenant hereunder. Sublandlord shall use commercially reasonable efforts to cause the Master
Landlord to perform its obligations under the Master Lease, and shall cooperate with Subtenant in its efforts to obtain such performance (but
Sublandlord shall not be required to commence litigation against Master Landlord to obtain such performance). Sublandlord hereby
covenants (1) not to voluntarily surrender the Master Lease to Master Landlord as to the Subleased Premises, and (2) not enter into any
amendment or other agreement with respect to the Master Lease which will prevent or adversely affect Subtenant’s use of the Subleased
Premises in accordance with the terms of this Sublease, increase
8
Subtenant’s obligations or decrease Subtenant’s rights under this Sublease, shorten the term of this Sublease or increase the rental or any
other sums Subtenant is required to pay under this Sublease.
12.3. Subordination of Sublease. This Sublease is subject and subordinate to the Master Lease in all respects. If the
Master Lease is terminated for any reason whatsoever, then this Sublease shall automatically terminate as if it expired by its terms (unless
assumed by Master Landlord) and in such event neither Sublandlord nor Master Landlord shall have any liability whatsoever to Subtenant as
a result of such termination, except that Sublandlord shall be liable to Subtenant for any such termination arising as a result of Sublandlord’s
breach of the Master Lease through no fault of Subtenant. Subject to Sublandlord’s obligation to use commercially reasonable efforts to
cause the Master Landlord to perform its obligations under the Master Lease as expressly provided in Section 12.2, under no circumstance
shall Sublandlord be obligated to, or be responsible or liable in any way for, Master Landlord’s failure to, (a) perform any acts required to be
completed by Master Landlord under the Master Lease, (b) supply any item, including, but not limited to, any utility or service to the
Subleased Premises required to be supplied by Master Landlord under the Master Lease, or (c) complete any work or maintenance in the
Subleased Premises, the Building or the Master Premises required to be completed by Master Landlord under the Master Lease; and no such
failure will in any way excuse Subtenant’s performance under this Sublease or entitle Subtenant to any abatement of Rent.
12.4. Incorporation of Terms. Except as expressly provided in this Section 12.4, Subtenant hereby assumes and agrees to
perform each and every obligation of Sublandlord under the Master Lease with respect to the Subleased Premises (and Sublandlord shall
have the right to elect to require Subtenant to perform its obligations under the Master Lease directly to Master Landlord on prior written
notice and Master Landlord’s consent to the same). Notwithstanding the foregoing, (i) to the extent of any inconsistencies between the
express terms of this Sublease and the terms of the Master Lease incorporated herein by reference, the express terms of this Sublease shall
control, and (ii) Subtenant shall have no renewal or extension rights, or rights to terminate the Master Lease, whether following a casualty or
condemnation event, or otherwise. In addition, the following Articles, Sections and Exhibits of the Master Lease are not incorporated herein:
(a) Sections 2.2, 3, 4, 5, 6, 8 and 12 of the Basic Lease Summary of the Original Lease; (b) Sections 1.3, 1.4, 2.2, 4.6, 8.5 (last two sentences
only), 21, 23.1, 25, 29.18 (except as it applies to notices to Master Landlord), and 29.24 of the Original Lease; (c) any references to a “Tenant
Work Letter” in the Master Lease; (d) Exhibits B, F and G of the Original Lease; (e) the First Amendment; (f) the Second Amendment (other
than Section 7); (g) the Third Amendment (other than Sections 7 and 13, and the judicial reference clause in Section 13 thereof shall be
applicable to this Sublease); (h) the Fourth Amendment (other than Section 7); (i) the Fifth Amendment; (j) the Sixth Amendment (other than
Sections 7 and 11); and (k) and Sections 2.2, 3, 4, 6, 7, 9, 10, 12, 13, 14 and 17 of the Seventh Amendment. For the avoidance of doubt,
references to Master Landlord in the following Articles, Sections and Exhibits of the Master Lease, which list is non-exclusive, refer only to
Master Landlord and are not obligations of Sublandlord: 5.3.7, 7.4, 10.2, 11 (as amended), 13, 18 (last sentence thereof) and 29.29.
12.5. Survival. The provisions of this Section 12 shall survive the expiration or earlier termination of this Sublease.
13.UTILITIES. Subtenant acknowledges that Sublandlord directly contracts for HVAC, water, electricity and gas to the Building
(collectively, “Sublandlord Utilities”). Subtenant shall have the right to use Subtenant’s Share of the Sublandlord Utilities; provided
Sublandlord shall not be responsible for providing any other services or utilities to the Subleased Premises, including, without limitation,
internet or other telecommunications services. Subtenant shall pay Sublandlord for the Sublandlord Utilities pursuant to Section 5.
Sublandlord shall not be responsible or liable in any way for any failure or interruption, for any reason whatsoever, of the services, utilities or
facilities that may or should be appurtenant or supplied to the Subleased Premises, including, without limitation, the Sublandlord Utilities,
9
and no such failure will in any way excuse Subtenant’s performance under this Sublease, constitute a constructive eviction, or entitle
Subtenant to any abatement of Rent (except as expressly provided in this Section 13). Notwithstanding the foregoing, if all or a material
portion of the Subleased Premises is made untenantable or inaccessible for more than five (5) consecutive business days after notice from
Subtenant to Sublandlord due to an interruption in Sublandlord Utilities that (a) does not result from a fire or other casualty event (which is
governed by Section 11 of the Master Lease), a condemnation event (which is governed by Section 13 of the Master Lease), Force Majeure
(as defined in the Master Lease), or from the acts or omissions of Subtenant, and (b) can be corrected through Sublandlord’s reasonable
efforts, then, as Subtenant’s sole remedy, Base Rent shall be abated for the period beginning on the day immediately following such five (5)
business day period and ending on the day such interruption to the Sublandlord Utilities ends, but only in proportion to the percentage of the
rentable square footage of the Subleased Premises made untenantable or inaccessible and not occupied by Subtenant. Subtenant shall pay to
Sublandlord as Rent hereunder any and all sums which Sublandlord may be required to pay to Master Landlord or any service provider
arising out of excess consumption by Subtenant or a request by Subtenant for additional building services. Sublandlord (i) may, at its sole
discretion, install sub- or check-meters to measure Subtenant’s actual consumption of electricity, and (ii) if Sublandlord reasonably
determines that Subtenant is using more than Subtenant’s Share of any Sublandlord Utilities, Sublandlord may, at Subtenant’s cost, install
additional sub- or check-meters to measure Subtenant’s actual consumption of such Sublandlord Utilities, and, in either case, Subtenant shall
thereafter pay to Sublandlord, as Rent, the actual, metered cost of such Sublandlord Utilities (at the cost charged by the applicable utility
provider), in the same manner as required by Section 5.
14.MAINTENANCE. Subtenant shall, at its sole cost and expense, perform all maintenance and repairs in the interior of the Subleased
Premises that Sublandlord is required to perform under the Master Lease; provided, however, that, at Sublandlord’s option, or if Subtenant
fails to make such repairs, Sublandlord may, but need not, make such repairs and replacements, and Subtenant shall pay Sublandlord’s costs
or expenses arising from Sublandlord’s involvement with such repairs and replacements upon being billed for same.
15.ASSIGNMENT AND SUBLETTING. Subtenant shall not assign, mortgage, hypothecate, encumber or otherwise transfer this
Sublease or sub-sublease (which term shall be deemed to include the granting of concessions and licenses and the like) or otherwise Transfer
(as defined in the Master Lease) the whole or any part of the Subleased Premises, including by operation of law (any of the foregoing, a
“Sublease Transfer”), without in each case first obtaining the prior written consent of Sublandlord, not to be unreasonably withheld or
delayed; it being agreed that it shall be deemed reasonable for Sublandlord to withhold or delay its consent to a Sublease Transfer if Master
Landlord has withheld or delayed its consent to the same. No Sublease Transfer shall relieve Subtenant of any liability under this Sublease.
Consent to any such Sublease Transfer shall not operate as a waiver of the necessity for consent to any subsequent Sublease Transfer. In
connection with each request for a Sublease Transfer, Subtenant shall pay Sublandlord’s reasonable cost of processing such Sublease
Transfer, including attorneys’ fees, and any fees or costs payable under the Master Lease, upon demand of Sublandlord (not to exceed the
actual cost charged to Sublandlord by Master Landlord to review the request, plus up to $7,500 for Sublandlord’s review costs). Any assignee
or subtenant shall assume all of Subtenant’s obligations under this Sublease and be jointly and severally liable with Subtenant hereunder.
Any Sublease Transfer hereunder must comply with the Master Lease, including, without limitation, the consent of Master Landlord.
Sublandlord shall have all of the rights of the “Landlord” under Article 14 of the Master Lease with respect to a Sublease Transfer, including
any recapture or transfer premium sharing rights. Subtenant shall have the rights of the “Tenant”
10
under Section 14.8 of the Master Lease, provided Subtenant shall provide any notice or any other documentation required thereby to
Sublandlord.
16.Indemnity.
16.1. By Subtenant. Subtenant shall, except to the extent caused by Sublandlord’s gross negligence or willful
misconduct, indemnify, protect, defend and hold harmless Master Landlord and Sublandlord and their respective affiliates, officers, directors,
employees, shareholders, agents, contractors, partners and lenders, from and against any and all Claims occurring within the Subleased
Premises or arising out of, involving, or in connection with, (a) the use or occupancy of the Subleased Premises by Subtenant, (b) the acts or
omissions of Subtenant or any of Subtenant’s invitees, agents or employees, (c) any breach of this Sublease by Subtenant, and (d) any
violation of Applicable Laws caused by Subtenant. If any action or proceeding is brought against Master Landlord or Sublandlord by reason
of any of the foregoing matters, Subtenant shall upon notice defend the same at Subtenant’s expense by counsel reasonably satisfactory to
Master Landlord and Sublandlord.
16.2. By Sublandlord. Sublandlord shall, except to the extent caused by Subtenant’s gross negligence or willful
misconduct, indemnify, protect, defend and hold harmless Subtenant and its affiliates, officers, directors, employees, shareholders, agents,
contractors, partners and lenders, from and against any and all Claims occurring within the Reserved Premises or arising out of, involving, or
in connection with, (a) Sublandlord’s gross negligence or willful misconduct, and (b) any breach of this Sublease by Sublandlord. If any
action or proceeding is brought against Subtenant by reason of any of the foregoing matters, Sublandlord shall upon notice defend the same
at Sublandlord’s expense by counsel reasonably satisfactory to Subtenant.
16.3. Survival. The indemnities in this Section 16 shall survive the expiration or earlier termination of this Sublease.
17.EXEMPTION OF SUBLANDLORD FROM LIABILITY. Unless caused by Sublandlord’s gross negligence or willful misconduct or
material breach of its obligations under this Sublease, none of Sublandlord or its affiliates, officers, directors, employees, shareholders,
agents, contractors, partners and lenders shall be liable for injury or damage to the person or goods, wares, merchandise, or other property of
Subtenant, Subtenant’s employees, contractors, invitees, customers, or any other person in or about the Master Premises, whether such
damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said
injury or damage results from conditions arising from the Master Premises or from any other source or place, and regardless of whether the
cause of damage or injury or the means of repairing the same is accessible. Notwithstanding anything to the contrary in this Sublease or the
Master Lease, in no event whatsoever shall Sublandlord be liable for injury to Subtenant’s business or for any loss of income or profit
therefrom or for any consequential, punitive or special damages.
18.DAMAGE AND DESTRUCTION; CONDEMNATION. In no event shall Sublandlord have any obligation to Subtenant to restore the
Subleased Premises or the Master Premises if damaged, destroyed or condemned as described in Article 11 or Article 13 of the Master Lease.
To the extent any damage, destruction or casualty loss occurs in the Master Premises or Subleased Premises which entitles Sublandlord to
terminate the Master Lease, Sublandlord may terminate the Master Lease (in which event this Sublease shall automatically terminate)
without liability to Subtenant. With respect to damage, destruction or condemnation (as described in Article 11 or Article 13 of the Master
Lease), Subtenant shall have no right
11
to abatement of Rent under this Sublease unless Sublandlord is entitled to abatement of rent under the Master Lease with respect to the
Subleased Premises.
19.BROKERS. Sublandlord and Subtenant hereby represent and warrant to each other that they have had no dealings with any real
estate broker or agent in connection with the negotiation of this Sublease, and that they know of no other real estate broker or agent who is
entitled to a commission in connection with this Sublease, other than: (a) Jones Lang LaSalle, representing Sublandlord, and (b) CBRE,
representing Subtenant (collectively, the “Brokers”). Each Party agrees to indemnify and defend the other Party against and hold the other
Party harmless for, from and against any and all Claims with respect to any leasing commission or equivalent compensation alleged to be
owing on account of the indemnifying Party's dealings with any real estate broker or agent other than the Brokers. The indemnities in this
Section 19 shall survive the expiration or termination of this Sublease.
20.NOTICES. Any notice, demand or request required or desired to be given under this Sublease to Sublandlord or Subtenant shall
be in writing via (a) personal delivery, (b) First Class U.S. Mail, return receipt requested, (c) FedEx or other reputable overnight carrier, or
(d) email (but only if a hard copy is sent within one (1) business day thereafter by one of the methods in the foregoing sections (a) through
(c), unless the recipient acknowledges receipt by return email), and shall be addressed to the address of the Party to be served, as set forth in
this Section 20. Notices sent by methods (a) through (c) will be deemed received upon actual receipt (or rejection of delivery) and notices
sent by email will be deemed received on confirmation of sending by the sender’s email server. Either Party may from time to time, by
written notice to the other Party in accordance with this Section 20, designate a different address than that set forth below for the purpose of
notice. Upon receipt of any notice from Master Landlord, Subtenant shall promptly deliver a copy of such notice to Sublandlord in
accordance with the terms and conditions of this Section 20.
12
Sublandlord:
Revolution Medicines, Inc. 700 Saginaw Drive
Attn: General Counsel Email:
with a copy to:
Procopio, Cory, Hargreaves and Savitch LLP
12544 High Bluff Drive, Suite 400
San Diego, CA 92130 Attn: David L. Crawford
Subtenant:
EditCo Bio, Inc. 600 Saginaw Drive
Attn: John Tan, CEO Email:
13
21.DEFAULT. The occurrence of any of the following events (each, an “Event of Default”) shall constitute a material default and
breach of this Sublease by Subtenant: (a) Subtenant’s failure to pay Rent, where such failure shall continue for a period of three (3) days
following Subtenant’s receipt of written notice thereof from Sublandlord; provided, however, that any such notice shall be in lieu of, and not
in addition to, any notice required under California Code of Civil Procedure, Section 1161, (b) the occurrence of a material default or breach
of the Master Lease due to Subtenant’s acts or omissions,; or (c) the occurrence of any of the events described in Section 19.1 of the Master
Lease. Upon any Event of Default under this Sublease, Sublandlord shall have all of the remedies available to Master Landlord pursuant to
the Master Lease, including without limitation the remedies enumerated in Article 19 of the Master Lease. All of Sublandlord’s rights and
remedies herein enumerated or incorporated by reference above are cumulative, and none will exclude any other right or remedy allowed by
law or in equity.
22.SURRENDER. On the expiration or earlier termination of this Sublease, Subtenant shall, at its sole cost and expense, surrender
and deliver up the Subleased Premises to Sublandlord, together with all improvements thereon, in the same condition as of the
Commencement Date, broom clean, normal wear and tear, casualty damage, and Sublandlord’s and Master Landlord’s obligations excepted,
and otherwise in accordance with the requirements of the Master Lease, including, without limitation, Article 15 of the Master Lease (as
applied only to the Subleased Premises). Subtenant shall promptly provide Sublandlord with a copy of its Environmental Assessment
prepared pursuant to Section 15.3 of the Master Lease. Unless Sublandlord otherwise agrees in writing, all alterations, additions or
improvements affixed to the Subleased Premises shall become the property of Sublandlord and shall be surrendered with the Subleased
Premises at the expiration of the Sublease Term, except that, subject to the rights of Master Landlord under the Master Lease, Sublandlord
may, by notice to Subtenant at the time of its consent thereto, require Subtenant to remove by the Expiration Date, or sooner termination of
this Sublease, all or any alterations, decorations, fixtures, additions, improvements and the like installed either by Subtenant or by
Sublandlord for Subtenant’s benefit, and to repair any damage to the Subleased Premises arising from the removal.
23.HOLDOVER. If Subtenant fails to surrender the Subleased Premises in accordance with the terms and conditions of this Sublease
on or before the Expiration Date or earlier termination of this Sublease, such tenancy shall be from month-to-month only (if with
Sublandlord’s written consent), or a tenancy at sufferance (if without Sublandlord’s written consent) and, in either case, at a rental rate that is
one hundred twenty-five percent (125%) of the monthly Rent payable under this Sublease immediately prior to termination or expiration of
this Sublease for the first month of hold-over and thereafter at a rate of one hundred fifty percent (150%) of the monthly Rent payable under
this Sublease immediately prior to termination or expiration of this Sublease, and Sublandlord’s acceptance of hold-over Rent shall not
constitute a renewal or extension of this Sublease. Notwithstanding any provision to the contrary contained in this Sublease, (i) Sublandlord
expressly reserves the right to require Subtenant to surrender possession of the Subleased Premises upon the expiration of the Sublease Term
or upon the earlier termination hereof and the right to assert any remedy at law or in equity to evict Subtenant or collect damages in
connection with any such holding over without Sublandlord’s prior written consent, and (ii) Subtenant shall indemnify, defend and hold
Sublandlord harmless from and against any and all Claims incurred or suffered by Sublandlord by reason of Subtenant’s failure to surrender
the Subleased Premises on the expiration or earlier termination of this Sublease in accordance with the provisions of this Sublease, including
without limitation one hundred percent (100%) of all holdover rent and other costs chargeable to Sublandlord pursuant to the Master Lease as
a result of Subtenant’s holdover. The provisions of this Section 23 shall survive the expiration or earlier termination of this Sublease.
24.PARKING. During the Sublease Term, Subtenant shall have non-exclusive use on a first come, first served basis of three (3)
unreserved parking spaces per every one thousand (1,000) rentable square feet of the Subleased Premises, in accordance with Article 28 of
the Master Lease. Subtenant’s right
14
to use the parking spaces is expressly conditioned upon Subtenant’s compliance with all reasonable rules and regulations respecting parking
established from time to time by Sublandlord or Master Landlord.
25.SIGNAGE. Subtenant is not entitled to any signage in or on the Building or the Master Premises without the prior written consent
of Sublandlord and Master Landlord. Notwithstanding the foregoing, Subtenant may, at its sole cost and expense, (a) install signage/branding
in the common lobby of the Building, subject to Sublandlord’s approval of the design and location, not to be unreasonably withheld,
conditioned or delayed, and (b) subject to Master Landlord’s consent, install “joint signage,” i.e. Subtenant’s name/logo, together with
Sublandlord’s name/logo, both located on the monument sign outside, in front of the Building.
26.GOVERNING LAW. The terms and provisions of this Sublease shall be construed in accordance with and governed by the laws of
the State of California.
27.PARTIAL INVALIDITY. If any term, provision or condition contained in this Sublease shall, to any extent, be invalid or
unenforceable, the remainder of this Sublease, or the application of such term, provision or condition to persons or circumstances other than
those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and
condition of this Sublease shall be valid and enforceable to the fullest extent possible permitted by law.
28.ATTORNEYS' FEES. If any Party commences litigation against another in connection with this Sublease, for damages for the
breach hereof or otherwise for enforcement of any remedy hereunder, the prevailing Party shall be entitled to recover from the other Party
such costs and reasonable attorneys' fees as may have been incurred, including any and all costs incurred in enforcing, perfecting and
executing such judgment.
29.COUNTERPARTS AND ELECTRONIC SIGNATURES. This Sublease may be executed simultaneously in counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Sublease may be executed
by a Party’s signature transmitted by email (including by Portable Document Format, DocuSign or other validated electronic signature
methods), and copies of this Sublease executed and delivered by means of emailed and/or electronic signatures shall have the same force and
effect as copies hereof executed and delivered with original signatures. All Parties hereto may rely upon emailed and/or electronic signatures
(including signatures by Portable Document Format, DocuSign or other validated electronic signature methods) as if such signatures were
originals. All Parties hereto agree that an emailed and/or electronic signature page may be introduced into evidence in any proceeding arising
out of or related to this Sublease as if it were an original signature page.
30.ENTIRE AGREEMENT. This Sublease, together with the Master Lease as incorporated or referenced herein, constitutes the entire
agreement and complete understanding of the Parties with respect to the matters set forth herein and merges and supersedes all prior, oral and
written, agreements and understandings, and all contemporaneous oral agreements and understandings, of any nature whatsoever with respect
to such subject matter.
31.PURCHASE AND SALE OF FF&E. As of the Commencement Date, Sublandlord shall purchase all of the furniture and equipment
owned by Subtenant which is located on the second (2nd) floor of the Building and is itemized in Exhibit C attached hereto (the “FF&E”) for
One Dollar and 00/100 Dollars ($1.00). On the Commencement Date or within five (5) days of request by Sublandlord thereafter, Subtenant
shall deliver Sublandlord a bill of sale for the FF&E substantially in the form of Exhibit D attached hereto. Notwithstanding the foregoing,
this Sublease shall be deemed a bill of sale and ownership of the FF&E shall automatically transfer to Sublandlord on the Commencement
Date. Except as otherwise
15
set forth herein, Seller shall transfer the FF&E to Buyer without recourse on an “AS IS”, “WHERE IS”, “WITH ALL FAULTS” basis, and
without any express or implied representation or warranty whatsoever; provided, however, that Subtenant represents and covenants that it is
the lawful owner of the FF&E, free from all liens, claims or encumbrances, and agrees to warrant and defend the title to the FF&E hereby
conveyed against the just and lawful claims and demands of all persons claiming by or through Seller.
32.IDF ROOM. During the Sublease Term, Subtenant shall have the right to access and utilize a portion (but not more than
Subtenant’s Share) of the server and rack space in the individual distribution frame/telecommunications/IT room located on the second floor
of the Building and depicted on the floor plan attached as Exhibit E attached hereto (the “IDF Room”). Rack space is subject to availability.
Subtenant shall not modify or alter the IDF room. Any telecommunications wiring or other work in the IDF Room, or from the IDF Room to
the Subleased Premises, must be done in accordance with the Master Lease, including, without limitation, Article 8 of the Master Lease, and
is subject to the direction and consent of Master Landlord and Sublandlord, and must be removed upon Subtenant’s surrender of the
Subleased Premises, if and to the extent required by the Master Lease or by Sublandlord. Subtenant shall give Sublandlord at least ten (10)
days’ advanced notice of any such work and shall reasonably cooperate and coordinate such work with Sublandlord, its representatives and
its contractors. Subtenant acknowledges that access to the IDF Room requires passage through occupied space; accordingly, all persons
entering the second floor must be accompanied by a representative of Sublandlord. Sublandlord shall use reasonable efforts to make a
representative available during reasonable times and upon advanced notice and the Parties shall reasonably coordinate such entry. Subtenant
shall be solely responsible and liable for any of its equipment and wiring in the IDF Room and shall maintain the same in good order and
repair at no cost to Sublandlord. Subtenant shall give Sublandlord at least twenty-four (24) hours’ written notice of the need to access the IDF
Room, except in case of emergency, in which event Subtenant shall give Sublandlord oral and email notice as soon as possible. The Parties
shall reasonably cooperate in their shared use of the IDF Room. Except to the extent caused by Sublandlord’s gross negligence or willful
misconduct, none of Sublandlord or its affiliates, officers, directors, employees, shareholders, agents, contractors, partners and lenders shall
be liable for injury or damage to the person or goods, wares, merchandise, or other property of Subtenant, Subtenant’s employees,
contractors, invitees located in the IDF Room or resulting from Subtenant’s use of the Reserved Premises to access the IDF Room.
Subtenant’s indemnification obligations in Section 16.1 shall apply to Subtenant’s use of the IDF Room and Subtenant’s use of the Reserved
Premises to access the IDF Room.
33.GENERATOR. During the Sublease Term, Subtenant shall have the right to connect to and utilize Subtenant’s prorata share of the
500 Generator (as reasonably determined by Sublandlord based on the ratio that the rentable square footage of the Premises bears to the
rentable square footage of the Building and the building located 500 Saginaw Drive and/or based on energy draw or capacity), subject to
Master Landlord’s consent and conditions. Sublandlord will maintain and repair the 500 Generator. Subtenant shall pay, as Rent, Subtenant’s
prorata share of all costs and expenses incurred by Sublandlord for taxes, permit fees, insurance, maintenance, repair, replacement or other
costs of the 500 Generator, as Rent, in accordance with Section 5.2. Sublandlord shall not be liable for any damages whatsoever resulting
from any failure in operation of the 500 Generator, or the failure of the 500 Generator to provide suitable or adequate back-up power to the
Subleased Premises, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill
or loss of use, in each case, however occurring, or loss to inventory, scientific research, scientific experiments, laboratory animals, products,
specimens, samples, and/or scientific, business, accounting and other records of every kind and description kept at the Subleased
16
Premises and any and all income derived or derivable therefrom. Subtenant’s indemnification obligations in Section 16.1 shall apply to
Subtenant’s use of the 500 Generator.
34.Conditions Precedent.
34.1. Seventh Amendment to Master Lease. This Sublease is subject to and contingent upon and shall be of no force or
effect until Sublandlord and Master Landlord have each executed and delivered the Seventh Amendment. In the event Master Landlord
and/or Subtenant do not so execute and deliver the Seventh Amendment within sixty (60) days of the Effective Date, Sublandlord may
terminate this Sublease upon written notice to the Subtenant after the expiration of such sixty (60) day period, but before the Seventh
Amendment is fully executed and delivered by Sublandlord and Master Landlord. If this Sublease is so terminated, Sublandlord shall
promptly return any prepaid Rent and the Security Deposit to Subtenant. If and when the Seventh Amendment is mutually executed and
delivered by Sublandlord and Master Landlord, the term “Master Lease,” as used in this Sublease, shall mean the Master Lease as amended
by the Seventh Amendment. Nothing in this Sublease shall be deemed to obligate Sublandlord to execute the Seventh Amendment or agree to
any particular terms therein, each of which shall be within Sublandlord’s sole and absolute discretion.
34.2. Master Landlord Consent. This Sublease is subject to and contingent upon and shall be of no force or effect until
Master Landlord’s execution of a written consent to this Sublease in a form reasonably acceptable to the Parties hereto (the “Landlord
Consent”), which the Parties acknowledge may be contained in the Seventh Amendment or may be by separate agreement among
Sublandlord, Subtenant and Master Landlord, in Master Landlord’s sole discretion. In the event Master Landlord does not so consent within
thirty sixty (60) of the Effective Date, Sublandlord may terminate this Sublease upon written notice to Subtenant after the expiration of such
sixty (60) day period, but before Master Landlord delivers the Landlord Consent. If this Sublease is so terminated, Sublandlord shall
promptly return any prepaid Rent and the Security Deposit to Subtenant.
[Signature page follows]
IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease as of the date and year set forth above.
SUBLANDLORD:
REVOLUTION MEDICINES, INC.,
a Delaware corporation
By:
/s/Mark A. Goldsmith
Name:
Mark A. Goldsmith
Title:
President and CEO
SUBTENANT:
EDITCO BIO, INC.,
a Delaware corporation
By:
/s/John Tran
Name:
John Tan
Title:
CEO
Exhibit A
Subleased Premises
Exhibit B
NOTICE OF SUBLEASE TERM DATES
To:
EditCo Bio, Inc.
600 Saginaw Drive, Suite 100
Redwood City, California 94063
Re:
Sublease dated , 2024 (the “Sublease”), between Revolution Medicines, Inc., a Delaware corporation (“Sublandlord”), and EditCo
Bio, Inc., a Delaware corporation (“Subtenant”) concerning Suite 100 on floor(s) one of the building located at 600 Saginaw Drive,
Redwood City, California.
In accordance with the Sublease, the parties confirm as follows:
1.
The Commencement Date occurred on .
2.
Sublandlord has delivered and Subtenant has accepted possession of the Subleased Premises.
3.
Rent commenced to accrue on , in the amount of .
4.
The Expiration Date will occur on , unless sooner terminated in accordance with the Sublease.
Exhibit C
FF&E Inventory
Office Space
-
61 desks
-
48 monitors
-
58 chairs
Conference room
-
21 chairs
-
41 tall stools
Kitchen
-
18 tables
-
30 chairs
-
34 tall stools
-
5 medium stools
Exhibit D
Bill of Sale
THIS BILL OF SALE (this “Bill of Sale”) is executed as of November 5, 2024, by EDITCO BIO, INC., a Delaware corporation
(“Seller”), for the benefit of REVOLUTION MEDICINES, INC., a Delaware corporation (“Buyer”).
Bill of Sale
For One and 00/100 United States Dollars (U.S.$1.00) and other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Seller hereby grants, transfers and conveys to Buyer all of Seller’s right, title and interest in the furniture, fixtures,
equipment and other personal property listed on Schedule 1 attached hereto and made a part hereof (the “FF&E”). Seller covenants that it is
the lawful owner of the referenced FF&E, free from all liens, claims or encumbrances, and agrees to warrant and defend the title to the FF&E
hereby conveyed against the just and lawful claims and demands of all persons claiming by or through Seller. Except as otherwise set forth
herein, this Bill of Sale is made by Seller without recourse on an “AS IS”, “WHERE IS”, “WITH ALL FAULTS” basis, and without any
express or implied representation or warranty whatsoever.
Seller and Buyer are parties to that certain Sublease dated as of November 5, 2024 (the “Sublease”). Except as otherwise directed
by Buyer, Seller may deliver the FF&E by leaving the FF&E in the second (2nd) floor of the Building (as defined in the Sublease) as of the
Commencement Date (as defined in the Sublease), and risk of loss shall pass from Seller to Buyer with respect thereto upon said
Commencement Date. If any FF&E remains in any part of the Reserved Premises (as defined in the Sublease) as of the Commencement Date
but is not listed in Schedule 1, such FF&E will be deemed sold to Buyer pursuant to this Bill of Sale regardless of such exclusion.
[Remainder of this page intentionally left blank.]
In Witness Whereof, Seller has executed this Bill of Sale as of the date and year first above written.
SELLER:
EDITCO BIO, INC.,
a Delaware corporation
By:
/s/John Tran
Name:
John Tan
Title:
CEO
Exhibit E
IDF Room
Exhibit 19.1
Revolution Medicines, Inc.
Insider Trading Compliance Policy and Procedures
Effective May 8, 2023
Federal and state laws prohibit trading in the securities of a company while in possession of material nonpublic
information regarding that company and in breach of a duty of trust or confidence. These laws also prohibit anyone who is
aware of material nonpublic information from providing this information to others who may trade. Violating these laws can
undermine investor trust, harm the reputation and integrity of Revolution Medicines, Inc. (together with its subsidiaries, the
“Company”), and result in serious criminal and civil charges against the individual and the Company. The Company reserves the
right to take whatever disciplinary or other measures it determines in its sole discretion to be appropriate in any particular
situation involving a violation of this Policy, including dismissal from the Company and disclosure of wrongdoing to
governmental authorities.
Persons Covered
This Insider Trading Compliance Policy and Procedures (this “Policy”) applies to all officers, directors and employees of
the Company and certain contractors or consultants of the Company that the Compliance Officer (as defined below) determines
are subject to the Policy (collectively, “Covered Persons”). Individuals subject to this Policy are responsible for ensuring that
members of their household comply with this Policy. This Policy also applies to any entities controlled by individuals subject to
the Policy, including any corporations, limited liability companies, partnerships or trusts, and transactions by these entities
should be treated for the purposes of this Policy as if they were for the individual’s own account. For purposes of this Policy,
restrictions on Covered Persons shall be deemed to include equivalent restrictions on the members of their household and
entities referenced above.
Policy Statement
No Covered Person shall purchase or sell any security of the Company while in possession of material nonpublic
information relating to the Company or of material nonpublic information relating any security of any other issuer that the
Covered Person learns of in connection with their activities on behalf of the Company. Without limiting the preceding sentence,
if a Covered Person possesses material nonpublic information about another company, such as a supplier, customer,
competitor or potential acquisition target, the Covered Person may not trade in the securities of that company until the
information becomes public or is no longer material.
In addition, Covered Persons shall not directly or indirectly communicate material nonpublic information to anyone
outside the Company (except in accordance with the Company’s policies regarding confidential information) or to anyone
within the Company other than on a “need-to-know” basis.
2
The concepts of “securities,” “purchase” and “sale” are defined broadly under securities laws and for purposes of this
policy, include at a minimum the following:
“securities” includes stocks, bonds, notes, debentures, options, warrants, equity interests and other convertible
securities, as well as derivative instruments related to any of the foregoing.
“purchase” includes not only the actual purchase of a security, but also any contract to purchase or otherwise acquire a
security.
“sale” includes not only the actual sale of a security, but also any contract to sell or otherwise dispose of a security.
These definitions extend to a broad range of transactions, including conventional cash-for-stock transactions,
conversions, the exercise of stock options, transfers, gifts, and acquisitions and exercises of warrants or puts, calls, pledging and
margin loans, or other derivative securities.
Blackout Periods
No Covered Person may purchase or sell any security of the Company during the period beginning at market close on
the last trading day of any fiscal quarter of the Company and ending after completion of the first full trading day after the public
release of earnings data for such fiscal quarter (each, a “Quarterly Blackout Period”). A “trading day” is a day on which U.S.
national stock exchanges are open for trading. If, for example, the Company were to make an earnings announcement on
Monday prior to 9:30 a.m. Eastern Time, then the Quarterly Blackout Period would terminate after the close of trading on
Monday. If an earnings announcement were made on Monday after 9:30 a.m. Eastern Time, then the Quarterly Blackout
Period would terminate after the close of trading on Tuesday.
In addition, the Company may impose trading suspensions during which some or all Covered Persons are prohibited
from purchasing or selling any security of the Company (a “Special Blackout Period” and together with a Quarterly Blackout
Period, a “Blackout Period”). The Company shall inform in writing those Covered Persons that are subject to any Special
Blackout Period and notify them when such Special Blackout Period has ended. The above prohibitions during a Blackout
Period do not apply to:
•
purchases of the Company’s securities from the Company, or sales of the Company’s securities to the
Company;
•
exercises of stock options or other equity awards or the surrender of shares to the Company in payment of the
exercise price or in satisfaction of any tax withholding obligations in a manner permitted by the applicable
equity award agreement, or vesting of equity-based awards, in each case, that do not involve a market sale of
the Company’s securities (the “cashless exercise” of a Company stock option or other equity award through a
broker does involve a market sale of the Company’s securities, and therefore would not qualify under this
exception);
3
•
bona fide gifts of the Company’s securities, unless the individual making the gift knows, or is reckless in not
knowing, the recipient intends to sell the securities while the donor is in possession of material nonpublic
information about the Company;
•
the required sale of shares of stock upon vesting of restricted stock or upon vesting and settlement of
restricted stock units to satisfy applicable tax withholding requirements if: (a) such sale is required by the
applicable plan or award agreement; (b) the election to require the sale of shares was made by the Company
in its sole discretion; or (c) the election to sell shares was made in compliance with this Policy; or
•
purchases or sales of the Company’s securities made pursuant to a plan adopted to comply with Rule 10b5-1
(“Rule 10b5-1”) under the Securities Exchange Act of 1934.
Exceptions to the blackout period policy may be approved by the Compliance Officer or, in the case of exceptions for
non-employee directors, the Lead Independent Director or the Chairperson of the Audit Committee of the Board of Directors.
Preclearance of Trades by Certain Covered Persons
All transactions in the Company’s securities by those Covered Persons listed on Schedule I (each, a “Preclearance
Person”) must be precleared by the Compliance Officer or their designee. Preclearance should not be understood to represent
legal advice from the Company that a proposed transaction complies with the law.
A request for preclearance must be in writing and the Preclearance Person making the request must certify that they
are not in possession of material nonpublic information about the Company. The Compliance Officer shall have sole discretion
to decide whether to provide preclearance. Notwithstanding receipt of preclearance, if the Preclearance Person becomes
aware of material nonpublic information about the Company, the Preclearance Person shall promptly notify the Compliance
Officer and the preclearance shall be automatically deemed to be revoked effective as of the time the Preclearance Person
becomes aware of this material nonpublic information. The commencement of any Blackout Period shall automatically
terminate any preclearance. Transactions under a previously established Rule 10b5-1 Trading Plan (as defined below) that has
been approved in accordance with this Policy are not subject to preclearance.
Material Nonpublic Information
Information is considered “material” if there is a substantial likelihood that a reasonable investor would consider it
important in making a decision to buy, sell or hold a security, or if the information is likely to have a significant effect on the
market price of the security. Material information can be positive or negative, and can relate to virtually any aspect of a
company’s
4
business or to any type of security, debt or equity. Also, information that something is likely to happen in the future—or even
just that it may happen—could be deemed material.
Examples of material information may include (but are not limited to) information about:
•
corporate financial results or financial forecasts;
•
progress and results of clinical trials;
•
possible mergers, acquisitions, tender offers, or dispositions;
•
major new products or product developments;
•
important business developments, such as possible new strategic collaborations or developments regarding
existing strategic collaborations;
•
director or officer changes;
•
significant borrowing or financing developments, including pending public sales or offerings of debt or equity
securities;
•
defaults on borrowings;
•
bankruptcies;
•
cybersecurity or data security or protection incidents; and
•
significant litigation or regulatory actions.
Information is “nonpublic” if it is not available to the general public. In order for information to become “public,” it
must be widely disseminated in a manner that makes it generally available to investors, such as through a press release, a filing
with the U.S. Securities and Exchange Commission or a Regulation FD-compliant conference call. The Compliance Officer shall
have sole discretion to decide whether information is public for purposes of this Policy.
The circulation of rumors, even if accurate and reported in the media, does not constitute public dissemination. In
addition, even after a public announcement, a reasonable period of time may need to lapse in order for the market to react to
the information. Generally, the passage of one full trading day following release of the information to the public is a reasonable
waiting period before this information is deemed to be public.
Post-Termination Transactions
Insider trading liability is not limited to the period when an individual is a service provider for the Company. Covered
Persons that may possess material nonpublic information should exercise caution trading in Company securities prior to
completion of the first full trading day after the public release of earnings data for the fiscal quarter in which the individual’s
relationship with the Company terminates or, if later, until that information has become public or is no longer material.
5
Prohibited Transactions
The Company has determined that there is a heightened legal risk and the appearance of improper or inappropriate
conduct if persons subject to this Policy engage in certain types of transactions. Therefore, Covered Persons shall comply with
the following policies with respect to certain transactions in the Company’s securities, even during open trading windows that
are outside of a Blackout Period or pursuant to Rule 10b5-1 Trading Plans.
Short Sales
Short sales of the Company’s securities are prohibited. Short sales of the Company’s securities, or sales of shares that
the insider does not own at the time of sale, or sales of shares against which the insider does not deliver the shares within 20
days after the sale.
Derivatives
Transactions in puts, calls, options or other derivative securities involving the Company’s equity securities, on an
exchange, on an over-the-counter market, or in any other organized market, are prohibited. This prohibition does not apply to
options granted to Covered Persons by the Company.
Hedging Transactions
Hedging transactions involving the Company’s securities, such as prepaid variable forward contracts, equity swaps,
collars and exchange funds, or other transactions that hedge or offset, or are designed to hedge or offset, any change in the
market value of the Company’s equity securities, are prohibited.
Margin Accounts and Pledging
Pledging Company securities as collateral for a loan, purchasing Company securities on margin (i.e., borrowing money
to purchase the securities), or placing Company securities in a margin account are each prohibited. This prohibition does not
apply to cashless exercises of stock options under the Company’s equity plans.
Partnership Distributions
Nothing in this Policy shall limit the ability of an investment fund, venture capital partnership or other similar entity
with which a Covered Person is affiliated to distribute Company securities to its partners, members, or other similar persons. It
is the responsibility of each affected Covered Person and the affiliated entity, in consultation with their own counsel (as
appropriate), to determine the timing of any distributions, based on all relevant facts and circumstances, and applicable
securities laws.
6
Rule 10b5-1 Trading Plans
The trading restrictions set forth in this Policy (other than those transactions described under “Prohibited
Transactions”) do not apply to transactions under a previously established contract, plan or instruction to trade in the
Company’s securities entered into in accordance with Rule 10b5-1 (a “Trading Plan”) that:
•
has been submitted to and preapproved by the Compliance Officer;
•
includes a “Cooling-Off Period” that extends to:
o
for Section 16 officers and directors, the later of (i) 90 days after adoption or modification of a Trading
Plan or (ii) two business days after filing the Form 10-K or Form 10-Q covering the fiscal quarter in
which the Trading Plan was adopted, up to a maximum of 120 days; and
o
for all other Covered Persons, 90 days after adoption or modification of a Trading Plan;
•
has been entered into outside of any Blackout Period applicable to the individual and when the individual was
not otherwise in possession of material nonpublic information about the Company, and the person who
entered into the Trading Plan has acted in good faith with respect to the Trading Plan;
•
has been adopted into in good faith and not as part of a plan or scheme to evade Rule 10b-5;
•
either (1) specifies the amounts, prices, and dates of all transactions under the Trading Plan; or (2) provides a
written formula, algorithm, or computer program for determining the amount, price, and date of the
transactions;
•
prohibits the Covered Person from exercising any subsequent influence over the transactions under the
Trading Plan; and
•
utilizes a form of Trading Plan document approved by the Company that complies with all other applicable
requirements of Rule 10b5-1, including applicable certification requirements.
The Compliance Officer may impose such other conditions on the implementation and operation of the Trading Plan,
including the utilization of a broker approved by the Company, as the Compliance Officer deems necessary or advisable.
Individuals may not adopt more than one Trading Plan at a time except under the limited circumstances permitted by Rule
10b5-1 (which include certain RSU sell-to-cover plans and plans that will not go into effect until expiration of a predecessor
plan) and subject to preapproval by the Compliance Officer.
7
An individual may only modify a Trading Plan outside of any Blackout Period applicable to the individual and, in any
event, when the individual does not possess material nonpublic information concerning the Company. Modifications to, and
terminations of, a Trading Plan are subject to preapproval by the Compliance Officer and modifications of a Trading Plan that
change the amount, price or timing of the purchase or sale of the securities underlying a Trading Plan will trigger a new Cooling-
Off Period. Covered Persons are not permitted to modify a Trading Plan more than once in any twelve-month period.
Covered Persons that have adopted a Trading Plan should exercise caution regarding any trades outside of their plan
and must comply with all requirements in this Policy, including with respect to Blackout Periods and, if applicable, preclearance
requirements.
The Company reserves the right to publicly disclose, announce, or respond to inquiries from the media regarding the
adoption, modification, or termination of a Trading Plan and non-Rule 10b5-1 trading arrangements, or the execution of
transactions made under a Trading Plan. The Company also reserves the right from time to time to suspend, discontinue, or
otherwise prohibit transactions under a Trading Plan if the Company, in its discretion, determines that such suspension,
discontinuation, or other prohibition is in the best interests of the Company.
Compliance of a Trading Plan with the terms of Rule 10b5-1 and the execution of transactions pursuant to the Trading
Plan are the responsibility of the person adopting the Trading Plan. Rule 10b5-1 only provides an “affirmative defense” to
liability under certain insider trading laws; it does not prevent a lawsuit or guarantee there will not be liability in the event of a
lawsuit.
Administration, Interpretation and Updates of this Policy
This Policy shall be administered, updated and interpreted by the Company’s General Counsel or their designee (the
“Compliance Officer”), provided that for transactions involving the General Counsel, the Compliance Officer shall be the
Company’s Chief Financial Officer. Questions regarding this Policy should be directed to the Compliance Officer. In particular,
interpretations and updates of this Policy may include amendments to, or departures from, the terms of this Policy, to the
extent consistent with the general purpose of this Policy and applicable securities laws.
None of the Company, the Compliance Officer or the Company’s other employees or directors assumes (a) any legality
or consequences relating to a person entering into, informing the Company of, or trading under, a Trading Plan, or (b) any
liability for or delay in reviewing and/or refusing to approve a Trading Plan submitted for approval or preclearance request.
Actions taken by the Company, the Compliance Officer or any other Company employee or director do not constitute
legal advice to Covered Persons, nor do they insulate Covered Persons from the consequences of noncompliance with this
Policy or with securities laws.
8
Certification of Compliance
All directors, officers, employees and others subject to this Policy may be asked periodically to certify their compliance
with the terms and provisions of this Policy.
Exhibit 21.1
List of Subsidiaries of
Revolution Medicines, Inc.
Name
Jurisdiction of Incorporation or Organization
Warp Drive Bio, Inc.
Delaware
EQRx, LLC
Delaware
EQRx UK Limited
England and Wales
EQRx International, Inc.
Delaware
Verum Norte Therapeutics, Inc.
Delaware
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-277368, No. 333-270065, No. 333-263098,
No.333-253791, No. 333-236493) and Form S-3 (No. 333-277640, No. 333-279225) of Revolution Medicines, Inc. of our report dated February 26, 2025
relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
San Jose, California
February 26, 2025
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark A. Goldsmith, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Revolution Medicines, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 26, 2025
By:
/s/ Mark A. Goldsmith
Mark A. Goldsmith, M.D., Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jack Anders, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Revolution Medicines, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 26, 2025
By:
/s/ Jack Anders
Jack Anders
Chief Financial Officer
(Principal Financial and Accounting Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Revolution Medicines, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2024 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: February 26, 2025
By:
/s/ Mark A. Goldsmith
Mark A. Goldsmith, M.D., Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Revolution Medicines, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2024 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: February 26, 2025
By:
/s/ Jack Anders
Jack Anders
Chief Financial Officer
(Principal Financial and Accounting Officer)