Rallybio Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 8, 2023

There are 14 speakers on the call.

Operator

Good day and

Speaker 1

thank you for standing by. Welcome to Revolution Medicine's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Erin Graves, Senior Director of Corporate Communications and Investor Relations.

Speaker 1

Please go ahead.

Speaker 2

Thank you, and welcome everyone to the Q2 2023 earnings call. Joining me on today's call are Doctor. Mark Goldsmith, Revolution Medicine's Chairman and Chief Executive Officer and Jack Anders, our Chief Financial Officer. Doctor. Steve Kelsey, our President of R and D will join us for the Q and A portion of today's call.

Speaker 2

As we begin, I would like to note that our presentation will include statements regarding the current beliefs of Revolution Medicines with respect to our business and the proposed acquisition of EQRx, including statements regarding our development Plans and timelines for our portfolio and pipeline and the expected timing and benefits of the proposed acquisitions, all of which are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward looking statements. These statements are subject to a number of assumptions, risks and uncertainties. Actual results may differ materially from these statements And except as required by law, the company undertakes no obligation to revise or update any forward looking statements. I encourage you to review the legal disclaimer slide of In connection with the proposed EQRx acquisition, Revolution Medicines and EQRx intend to file documents with the SEC, including a registration statement on Form S-four containing a joint proxy statement and prospectus. Investors and with the SEC relating to the proposed transaction when they are filed because they will contain important information.

Speaker 2

With that, I will turn the I'll turn the call over to Doctor. Mark Goldsmith, Revolution Medicine's Chairman and Chief Executive Officer. Mark?

Speaker 3

Thanks, Erin. It's good to be with you for today's call. We'll keep our prepared remarks brief given the update we provided to investors just last week. First, I'll provide a review of company progress, Including the significant updates we reported last week on the schedule of upcoming presentations on our first two Clinical RASM inhibitors RMC6236 and RMC6291 planning for late stage development activities And of course, announcement of our planned acquisition of EQRx. Next, Jack Andrews will describe our 2nd quarter financial results.

Speaker 3

And finally, we'll open the line for questions. Beginning with clinical and development highlights, We announced last week that we will report a significant clinical update on the antitumor activity of RMC6236, Our groundbreaking RAS multi ON inhibitor in patients with non small cell lung cancer or pancreatic cancer to the scientific community in an oral presentation on October 22 at the ESMO Congress 2023. We also announced our intention to present additional supporting clinical data on RMC6236 at the AACR NCI EORTC International Conference on Molecular Targets in Cancer Therapeutics, commonly referred to as the Triple Meeting. This presentation will occur in October shortly before ESMO and Revolution Medicines will deliver an invited plenary presentation entitled targeting RAS addicted cancers with investigational RAS ON inhibitors. Based upon the encouraging data trends we've seen thus far with RMC6236, We also announced that planning is already underway for 1 or more single agent pivotal clinical trials potentially to begin in 2024.

Speaker 3

Moving on to RMC6-two ninety one, our KRAS G12C selective RAS ON inhibitor. We plan to present a first report on initial clinical findings with RMC-six thousand two hundred and ninety one at the triple meeting in October, which will include preliminary evidence of differentiation from RASOST inhibitors. In view of growing evidence in support of a favorable Tolerability and anti tumor activity profile for RMC6236. We believe it may emerge as our RAS companion inhibitor of choice to be assessed in combination with our mutant selective RAS ON inhibitors. Along with encouraging initial clinical experience with RMC-six thousand two hundred and ninety one, We are also happy to report that planning is underway for a Phase 1, 1b clinical trial to evaluate the combination of RMC-six 236 and RMC-six thousand two hundred and ninety one potentially to begin in early 2024.

Speaker 3

And finally, we are pleased to have announced that Site activation under an investigational new drug application is underway for our oral mutant selective KRAS G12D inhibitor, RMC-nine thousand eight hundred and five. With these steps, we now have 3 compelling RASon inhibitors in the clinic, each with its own interesting profile, a major milestone for our company and we hope for the field of oncology. Overall, we are energized by the trajectory we see for our RASAN inhibitor drug candidates to enter late stage development and by our growing pipeline of additional mutant selective inhibitors behind these and we look forward to sharing more as these assets progress. Regarding our SHIP-two inhibitor, RMC-four thousand six hundred and thirty, decisions about future development will be made after analysis of a complete data set from the RMC-four sixty three thousand and three study and other considerations, including the potential of RMC-six thousand two hundred and thirty six as a RAS companion inhibitor. Likewise, the future development of RMC5845, Our SARS-one inhibitor, which is not expected to offer an advantage over RMC-four thousand six hundred and thirty will be evaluated following analysis of the complete RMC 463003 dataset and other factors.

Speaker 3

Additionally, we are continuing to evaluate RMC-five thousand five hundred and fifty two, mTORC-one for EBP-one as a single agent in a Phase 1, 1b clinical study with the aim of studying it in the future as a RAS companion inhibitor for use in combination with RAS ON inhibitors, particularly in patients with RAS addicted tumors exhibiting hyperactivation of the mTOR signaling pathway. We expect to provide additional characterization of the single agent profile for this compound at the upcoming triple meeting in October. Turning to important business news reported last Tuesday. We announced that Revolution Medicine signed an agreement to gain more than $1,000,000,000 in additional capital through the acquisition of EQRx, a deal that is focused entirely on strengthening our cash position. We summarized the terms and timing of this transaction last week and provided further details in our 8 ks filing, which I encourage investors to review.

Speaker 3

With significant additional capital that is supportive of the enormous opportunity Created by the scientific advances and clinical momentum we have established to date, this deal will reinforce and help us sustain Our parallel development approach for our extensive RAS ON inhibitor pipeline in multiple RAS driven cancers by enhancing our balance sheet, thereby increasing our company's financial certainty in a challenging macro environment. We're pleased that initial feedback we've received from investors on the transaction has been very positive and with important clinical updates in October and the anticipated close of the acquisition in November, the second half of this year promises to be action packed. I'll now turn to Jack Anders, our CFO, to provide a financial update. Jack?

Speaker 4

Thank you, Mark. Turning to our 2nd quarter financials, we ended the quarter with 909,500,000 and cash, cash equivalents and investments. Total revenue for the Q2 of 2023 was 3,800,000 consisting of revenue from the company's now terminated collaboration agreement with Sanofi. Total operating expenses for the Q2 of 2023 were $112,600,000 The increase in operating expenses over the prior year was largely due to clinical trial and manufacturing expenses for RMC6236 and RMC6291, Research expenses associated with our preclinical portfolio and an increase in personnel related expenses resulting from additional headcount. Net loss for the Q2 of 2023 was 98,300,000 or $0.92 per share.

Speaker 4

We are reiterating our financial guidance and continue to expect full year 2023 GAAP net loss to be between $360,000,000 $400,000,000 which includes estimated non cash Stock based compensation expense of $40,000,000 to $50,000,000 Note that we are pleased To strengthen our balance sheet further through the acquisition of EQRx, a transaction we expect will close in November of this year, but that our current financial guidance excludes the impact of this proposed transaction. And with that, I'll now turn the

Speaker 5

call back over to Mark.

Speaker 3

Thank you, Jack. Reflecting on the quarter and looking ahead to the second half of the year, it is an exciting time for Revolution Medicines. With important clinical updates for both RMC6236 and RMC6299 in the fall, planning underway for late stage development Of RMC6236 and a new clinical study of our first intra pipeline combination featuring RMC6236 RMC-six thousand two hundred and ninety one, RMC-nine thousand eight hundred and five entering the clinic and the anticipated close of the EQRx Acquisition to help supercharge our work, we have a very full plate. Our 1st great team is passionate and highly energized about fulfilling our mission of discovering, developing and delivering pioneering RAS ON inhibitor drugs on behalf of patients with RAS addicted cancers, And we are working hard to provide hope to these patients. Importantly, our work wouldn't be possible without the support of our patients, Clinical investigators, scientific and business collaborators, advisors and shareholders.

Speaker 3

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

Speaker 1

Thank you. We'll now conduct a question and answer session as mentioned. And rejoin the queue if you have additional questions. Please standby while we compile our Q and A roster. Our first question comes from the line of Mark Fram with TD Cowen, please proceed.

Speaker 6

Hi, thanks for taking my questions. Maybe just to start on the Finances, just the guide there's obviously a fair amount of step up in R and D expenses on a quarter over quarter basis and the guidance kind of Implies relatively flat the rest of the year. But then you're also talking about supercharging The R and D work, just how should we think about the trajectory of R and D spend kind of as we get late into the year and into next year, You'll close the deal. Hopefully, the data looks pretty good and is justifying a lot more trials for 6,236.

Speaker 7

Good morning. Thanks for the question. This is Jerrick Anders here. I think if you turn to our guidance, We've guided to net GAAP loss of $360,000,000 to $400,000,000 Our GAAP net loss for the first half of the year was $166,800,000 So the second half of the year will be a step up relative to the first half. And we expect that EBIT to be a bit of a step up relative to where Q2 spend was as well.

Speaker 6

And then carrying that forward into next year, how Should we think of kind of step changes as you expand out the program or is it more incremental?

Speaker 7

So we haven't provided any guidance Relative to 2024, it's fair to say it's not going to decrease relative to the second half of twenty twenty three, But we'll provide more guidance around 2024 spent at a future date.

Speaker 1

Thank you. One moment for our next question. This is from the line of Jonathan Chang with Leerink Partners. Please proceed.

Speaker 8

Hey, guys. Thanks for taking the question. This is Vesel Ashit on for Jonathan. I wanted to ask if you could provide a little bit more color on what the single agent path forward could look like for 6,236? How you're thinking this could be positioned relative to standard of care?

Speaker 8

And also where you are in regulatory interactions for those studies and what steps need to occur before initiating those?

Speaker 9

Hi, this is Mark Goldsmith. Thanks for your question. That's a terrific question, but probably for another time. We will provide the clinical updates this fall as planned. And in conjunction with those disclosures, we expect to provide A little more visibility into what we're thinking, but we'd like to base that forward looking set of comments on the actual data.

Speaker 9

So I think at this point, stay tuned and we'll share more when we're able to do so.

Speaker 8

Appreciate it. Thank you.

Speaker 1

Thank you. One moment please. Our next question comes from the line of Chris Shibutani with Goldman Sachs. Please proceed.

Speaker 10

Hi, everyone. This is Charlie on for Chris. Thank you so much for taking our questions. Maybe real quick on 6,236, just wondering as the dose escalation Study continues to push higher. How should we be thinking about the selection of a go forward dose, particularly with respect to combination settings?

Speaker 10

Just wondering, Is there the potential for different doses to be selected for different combos as you look for these combination studies to start next year? And just wondering with respect to a further widening therapeutic window? Thank you.

Speaker 11

The selection of the optimal Single agent dose for pivotal studies is currently ongoing, and We, like many other people, are feeling our way around that with in the context of Project Optimus. Buck, obviously, we have a big vested interest in ensuring that we get the dose right for us As close to right as we could possibly get in the context of Phase 1 dose escalation and expansion. So I think you just have to trust that we'll do as good a job as we need to do and that we will choose a dose that is efficacious and tolerable over the long term. With regards to the potential for Different doses in combination. I think we will always reserve the right to alter the dose of RMC 6236 in combination if it is necessary to do so.

Speaker 11

As of today, the safety and tolerability profile that we're seeing does not automatically Suggest that we will need to do that. But obviously, as we start those clinical combinations, we will have to react The individual fixed tolerability profile that we see. So I don't think we're expecting that we will have to modify the dose for combinations, but if We need to then we reserve the right DUSO.

Speaker 10

Okay. That's helpful. Thank you so much. And maybe just a quick follow-up just on the data coming up with 6,036. I know This is going to be for the lung and pancreatic patients in the study.

Speaker 10

Just wondering if there's an update on the CRC cohort in the study. Thank you.

Speaker 11

We, as we previously disclosed publicly, do not have a very big database of patients With colorectal cancer in the RNC6236 Phase I study, there are a number of reasons for that. The intention is to get us close to a recommended Phase II dose as we can And then look at the activity and safety profile of RFC 6,036 in colorectal cancer Without dose being a variable, so that's something that will happen in due course. But Having said that, the update on safety and tolerability that we will provide will include A few patients with colorectal cancer, but I don't anticipate that being terribly informative For anybody from the perspective of efficacy. So I think with regards to efficacy in raspbian colorectal cancer, It's something that's high priority for us, but yet to evolve.

Speaker 1

Okay. Thank you. One moment please. Our next question comes from the line of Jay Olson with Oppenheimer. Please proceed.

Speaker 12

Hey, thanks for taking the questions. Can you walk us through the rationale behind the doses that you've Chosen for dose escalation of 6,236 and the timing for when you expect to have a recommended Phase 2 dose?

Speaker 9

I think the question is, how are doses chosen in the dose escalation of 6,236? Because he's asking

Speaker 11

for getting

Speaker 9

an OpEx. What's the timing for getting to a recommended Phase 2?

Speaker 11

Yes. Well, The dose escalation scheme that we used was extremely conventional actually. The starting dose was based on the ICH S9 guidelines, which we drew from the A reasonably conservative assessment of what we saw in the GLP toxicity studies. And that led us Start at a relatively low dose of 10 milligrams daily. The percentage increase in dose from now Followed what has been somewhat perversely described as a modified Fibonacci She designed.

Speaker 11

It's got absolutely nothing whatsoever to do with Fibonacci sequence at all. But what it does do is gradually reduce The percentage increase in dose as you go up through the dose escalations. Right now, we're investigating 400 milligrams daily. 300 milligrams daily was considered reasonably well tolerated. There were some toxicities But not anywhere near enough for it to be, call it, maximum tolerated dose.

Speaker 11

And really the timing for declaration The recommended Phase 2 dose really depends on what we see at the 400 milligram dose level. The cadence for Each dose level right now is somewhere between 6 weeks to 2 months per dose level. We'll have to get all the patients screened, Enrolled and treated and then evaluated. And so we'll see. I really don't know how close We are to the maximum tolerated dose or a recommended Phase 2 dosing schedule at the moment.

Speaker 11

We just know that We're dosing at the dose we're dosing and we will continue to dose escalate until we hit the top dose.

Speaker 12

Okay. Thank you. Understood. And maybe just as a follow-up, can you elaborate on the timing of the Initiation of pivotal studies for 6,236 next year and what factors will impact your decision on the number of pivotal studies you'll be Initiating next year, does it depend on closing the EQRx deal?

Speaker 9

No, it's really not about the EQRx deal. It's much more technically driven. You and Steve just had a conversation about selection of the recommended Phase 2 dose, which absolutely would be required and would require FDA evaluation consideration and Then their input into what that dose is. So that process in and of itself just takes a while. And that's after we have the data.

Speaker 9

And as you and Steve just discussed, we don't yet know what that what the end game is for that dose escalation. So I think that's going to dictate Timing next year, and that's pretty straightforward of an answer to it. And then your second half of that sentence was you were asking a second part to that question?

Speaker 11

How many Phase II clinical trials?

Speaker 9

Yes. We're planning for 1 or more. And The details of that again would be best discussed in the context of data that will be disclosed at the ESMO meeting.

Speaker 1

Thank you. One moment please. Our next question comes from the line of Ami Fadia with Needham. Please proceed.

Operator

Hi, good evening. Thanks for taking my question. With regards to RNC6236, can you talk about The current standard of care for patients in lung cancer and pancreatic and what is Kind of the competitor there in terms of either response rates or duration of effect. And we've seen some preclinical data from 6,236, which Gave responses somewhere in the vicinity of 60% overall response rate. Where do you think data in the clinic could fall relative to that?

Speaker 9

Well, we certainly can't answer the last question, but we can try to answer the first question and Doctor. Kelsey is In

Speaker 11

the best position to do that. It's easier just to focus on what happens Patients with non small cell lung cancer and pancreatic cancer, once they've failed their first line of chemotherapy For advanced disease, I think, otherwise I'll probably

Speaker 7

be here for about an hour.

Speaker 11

Most of the patients all of the patients in the study right now have received some form of intensive chemotherapy plus or minus immunotherapy for Advanced non small cell lung cancer of pancreatic cancer. Right now, for if you don't have the G12C mutation, And the standard of care is docetaxel, there's an option to give a VEGF inhibitor Such as rambucirumab with the docetaxel, which has some impact on a favorable impact on ANCA. But that's essentially the That's the regulatory standards of which anybody would be held In that particular scenario, also, RASMUN also cell lung cancer has failed Flat double chemotherapy as a checkpoint inhibitor. And I think the conventional outcomes are readily assessable from looking at the Comparator arm from the Amgen's COBRA200 study, I mean, I think what Amgen saw In the docetaxel on that study is a reasonable representation of what would happen in the real world With docetaxel, patients with pancreatic cancer, it's very it's much more complicated because there's not really And a single established standard of care, patients who are really thick can probably tolerate Something like FOLFIRINOX upfront, patients who are listed may get Gemcitabine based chemotherapy upfront. And if they fail That, which they all do.

Speaker 11

There's not an awful lot left in the therapeutic armamentarium. So a lot of patients go on to answer clinical trials. Most of the clinical trials have been published, have been experimental versions of cytotoxic drugs. Frankly, the outcomes have been pretty poor. I mean, the response rates of or around 10% to 14% So progression free survival is anything anywhere between 3 to 3.5 months.

Speaker 11

So those are the sort of standards that we We're looking to be with RMC6236. But as Mark said, the data that we have, Which won't be final data by a long shot because there's still dose escalating. The data that we will get, the data cuts Immediately before the presentations will be what they are at the time. And neither Mark or I or unfortunately can I predict what we're going to see at this stage? All we know is that we presented some preliminary data back in February and The data that we have coming in, in real time has been directionally favorable.

Operator

Great. Thanks. And maybe just a quick follow-up on 6,291. Can you sort of talk to how you're thinking about What is sort of the bar in terms of safety that you'd like to see to be able to sort of lower combination therapy in 4th line?

Speaker 11

Yes. I think that those standards are pretty well established for the G12C The inhibitors, I mean, firstly, the tolerability of any drug That's got to be better than single agent docetaxel. But when specifically with regards to RAS inhibitors, Particularly RAS G12 C inhibitors. The real test, I think, of whether any KRAS inhibitor is going to be sustainable and beneficial to patients in lung cancer as well or not it can be combined with a checkpoint Checkpoint inhibitors are well established at standard of care in non small cell lung cancer. And it's very hard to find a niche where they're not recommended.

Speaker 11

I mean, even the meta analysis that the Food and Drug Administration presented at ASCO suggests that combining chemotherapy with an anti PD-one or anti EDL-one inhibitor is beneficial across the entire representation of patients with non store cell lung cancer. So I think That's the real barometer of the safety tolerability profile for a RAS inhibitor. There are other things Well, I mean, you can look at the safety profile for adagrassid and sotirassid and get a sense of what's acceptable with regards to GI toxicity See, and other toxicities. But I think the reality is it's all boiling back to liver toxicity And whether or not you can give these agents in combination with pembrolizumab or within a month of stopping Peptinezumab, of course, there's still a lot of Peptinezumab floats right in the blood even a month after The last dose, so that's really the key, I think.

Speaker 1

Okay. Thank you. One moment, please. Our next question comes from the line of Alex Stranahan with Bank of America. Please proceed.

Speaker 13

Hey guys, thanks for taking our questions. 2 from us. First, just to put a finer point on 6,236 pivotal studies, obviously appreciating that the majority of this will Happened after the data at ESMO. But assuming that you see activity in say 2 or 3 tumor types or 2 or 3 Different KRAS mutations, would the plan be then to pursue all of those in parallel for the broadest label possible or would you Prioritize certain tumors or certain mutations first and then seek for label expansions down the road. And I've got a follow-up.

Speaker 9

Yes, I think there are 2 parts to the answer. The first part, Alex, is very much we're committed to as much of a parallel approach to late stage development as is practical and has made sense. And in fact, that's part of the motivation for the EQRx acquisition, just to make sure that we have the financial depth to be able to do so. So we are committed to pursuing things in parallel when there's a compelling path to do so. Obviously, that's intended to maximize the potential benefit for patients as quickly as possible.

Speaker 9

And of course, there are also now other external factors like the IRA that makes it much harder To pursue a serial program, where you just continuously add on indications at the back end, that just becomes Pretty meaningless from a commercial point of view. So I think both for good reasons and for extraneous external reasons, We're going to pursue as parallel approach as makes sense to us to do. With regard to your 2nd question, which I or the second part of this, exactly which things will be included in that parallelized Approach will depend on exactly what the data show. And I think you'll get more understanding of that When we are able to show a then current dataset in October, the trend suggests to us that there's rationale for pursuing multiple Thanks, but best to look at a current data set and to provide the context for our vision and our strategy at that Point in time. We're obviously very deeply engaged in developing options around that.

Speaker 9

And It's just too early though to convey any of that until we can link it to data that you are able to see.

Speaker 13

Okay, great. Thanks. And then just quickly on 5,552, any framing you can provide around the update We should expect that the triple meeting, given there was some single agent activity in the prior update, number of patients, duration of follow-up, Just broad strokes if you can. Thank you.

Speaker 7

Yes. Well, I think it's important

Speaker 9

to keep in mind that the goal That we have for RMC-five thousand five hundred and fifty two is to qualify as a potential RAS companion inhibitor to be used in combination with RAS inhibitors and particularly in combination with our RAS ON inhibitors. So that's really what we've been doing and we felt that we had the time To do this carefully and to do dose optimization, which is really what we've been doing, dose optimization, and Primarily to felt the dose going forward that we can work with in combination with RASOST inhibitors. So that's what you'll see is sort of more of that dose optimization. We don't currently have plans to pursue it As a single agent beyond getting to understand the dose and safety relationship, the dose tolerability relationship. And so really you'll start to see activity most important activity data will come from the combination work in the future.

Speaker 9

We don't have yet today a plan to lay out for you about that.

Speaker 1

Thank you. One moment please. Our last question comes from Ben Burnett of Stifel. Please proceed.

Speaker 5

Hi, thank you. I want to just also ask about RMC-six thousand two hundred and thirty six, the res multi program. I guess as you dose higher, Will you are there plans to assess different dose schedules or will the focus really be on a single schedule like a different doses?

Speaker 9

Yes, I think we've made that pretty clear for the last number of maybe 6 months that we're using a daily dosing schedule That seems to be behaving well. We get good coverage over many hours after dosing. So essentially Pretty continuous coverage of the target. So it's not clear to us. It certainly isn't clear why one might increase the frequency of dosing.

Speaker 9

And the only advantage of decreasing the frequency would be if we could somehow drive to higher exposure levels at peak And then balance that with some sort of tolerability benefit by allowing exposures to fall over the interval. At the moment, we don't have explicit plans to evaluate those alternate kinds of schedules. We retain The flexibility to do so, we of course have a lot of experience with that from our RMC 4630 SHP2 inhibitor program, but we don't have any immediate plans Or concrete plans to do so because the daily dosing is working out very well for us.

Speaker 5

Okay. Okay, that's great. And if I could just ask one more follow-up on RMC6236. Recognizing that you recently provided a bit of an update last But do you have any more clarity as to whether or not we might get to see some patient data at that 400 mg dose level in either of the October updates? No as in no patient data 400 mgs or no more clarity

Speaker 9

That was a don't know. I don't know.

Speaker 11

It was a minimal clarity, I think.

Speaker 9

Yes. If the question was, well, can't we provide more clarity? No. But I don't know the answer to the question of whether or not there will be any 400 Milligram patients. If we have evaluation data At the time that we do a data cut, then we'll include those data.

Speaker 9

I mean, there's not we're not handpicking which patients to include, But that cohort was just launched relatively recently. So I just think Yes, the screening is ongoing.

Speaker 11

So it's not entirely clear what The timing of the dosing is going to sync up with the timing of the data cut, which slide, but we don't really answer your question. The answer is hopefully we'll have some early data, but I don't think we can guarantee

Speaker 13

Okay. I appreciate it. Thank you all.

Speaker 1

Thank you. I'm showing no further questions at this At this time, I would now like to turn the conference back to Doctor. Mark Goldsmith for closing remarks.

Speaker 9

Thank you, operator, and thank you to everyone for

Speaker 1

This concludes today's conference call. You may now disconnect.

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