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REDWOOD CITY, Calif. - Revolution Medicines, Inc. (NASDAQ:RVMD), a $7.46 billion market cap biotechnology company, has secured a $2 billion flexible funding agreement with Royalty Pharma to support its independent global commercialization strategy for RAS-addicted cancer therapies, the company announced Tuesday. According to InvestingPro data, the company maintains a strong liquidity position with more cash than debt on its balance sheet.
The funding consists of up to $1.25 billion in synthetic royalty financing tied to future sales of daraxonrasib, Revolution’s RAS(ON) multi-selective inhibitor, and up to $750 million in corporate debt. Notably, $1.25 billion of the total funding remains optional for Revolution Medicines, accessible at its discretion upon meeting specific milestones. The company’s robust financial position is reflected in its impressive current ratio of 13.46, indicating strong ability to meet short-term obligations.
Revolution Medicines has already received the first $250 million tranche at closing, with a second $250 million tranche due following positive data from its RASolute 302 Phase 3 trial in previously treated pancreatic ductal adenocarcinoma patients.
The royalty structure is tiered based on sales volume, with rates decreasing as sales increase. For the initial $500 million in pre-approval funding, royalty rates range from 4.55% on the first $2 billion in annual sales to zero on sales above $8 billion. If all five tranches are utilized, the royalty rates would range from 7.80% on the first $2 billion to zero above $8 billion.
The debt component includes three $250 million tranches, with the first becoming available after FDA approval of daraxonrasib for metastatic pancreatic cancer, if achieved by January 2028.
"This funding agreement significantly increases the financial resources we can deploy while preserving optionality as we scale our operations," said Mark A. Goldsmith, CEO and chairman of Revolution Medicines, in a statement based on the press release.
The company has removed its previous cash runway guidance following this agreement.
In other recent news, Revolution Medicines has received Breakthrough Therapy Designation from the U.S. Food and Drug Administration for its experimental cancer drug, daraxonrasib, targeting metastatic pancreatic ductal adenocarcinoma in patients with KRAS G12 mutations. The designation aims to expedite the drug’s development, with a Phase 3 study currently underway and results expected in 2026. Additionally, the company has initiated a Phase 3 trial for daraxonrasib in treating non-small cell lung cancer, focusing on patients with specific RAS mutations. This trial will assess the drug’s efficacy against docetaxel chemotherapy in a global patient cohort.
In other developments, Barbara Weber, M.D., has resigned from Revolution Medicines’ board of directors, a decision reportedly unrelated to any disagreements with the company. On the financial front, Oppenheimer has maintained an Outperform rating on Revolution stock, highlighting the company’s strong clinical programs. Meanwhile, H.C. Wainwright adjusted the stock’s price target to $72, citing promising results from clinical studies involving elironrasib monotherapy for lung cancer. These studies demonstrated notable objective response rates, supporting the potential of elironrasib in the treatment of non-small cell lung cancer.
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