Revolution Medicines has secured a potential funding infusion of up to $2 billion from Royalty Pharma in return for a slice of the profits if Revolution’s lead cancer drug makes it to market.
Revolution launched a second phase 3 study of the candidate, a RAS(ON) multi-selective inhibitor called daraxonrasib, in patients with RAS mutant non-small cell lung cancer (NSCLC) last month. A late-stage study of daraxonrasib in patients with pancreatic ductal adenocarcinoma (PDAC) is ongoing.
This morning’s deal gives Revolution the financial firepower to take daraxonrasib through to commercialization without the need for a Big Pharma partner. The biotech also plans to use the funding to accelerate work on the rest of its RAS(ON) inhibitor portfolio, which includes a RAS(ON) G12D-selective inhibitor called zoldonrasib being tested in patients with KRAS G12C-mutant NSCLC.
RAS mutations are one of the most common oncogenic drivers of NSCLC, occurring in around 30% of cases, according to the Revolution.
A total of $1.25 billion of the money pledged by Royalty has been agreed in exchange for tiered royalties on net sales of daraxonrasib over 15 years. The royalty rate begins at 4.55% on the first $2 billion of sales before shrinking as sales increase until stopping altogether for sales above $8 billion.
Revolution has already received the first $250 million tranche of funding from Royalty, and is due to receive the same amount again should the phase 3 PDAC study hit its goals. The remaining $750 million of the $1.25 billion can be accessed by Revolution after daraxonrasib is approved and certain other milestones are hit.
But if Revolution does decide to use all $1.25 billion of the funding on offer, it would boost the royalty rate to 7.8% for sales below $2 billion before reducing to 2.4% for sales between $4 billion and $8 billion.
If zoldonrasib eventually gets approved for the same indications as daraxonrasib, then these sales would also be included in net sales figures used to decide the royalties due to Royalty, Revolution explained in the release.
On top of that $1.25 billion royalty-related funding deal, Royalty will also offer $750 million to Revolution as a loan spread across three $250 million tranches. This loan will be linked to the commercialization of daraxonrasib, with the first tranche available if the drug gets approved for PDAC and the other two tied to hitting certain sales milestones.
Even before the financing deal, Revolution was hardly short of money—having ended March with $2.1 billion to hand in cash and equivalents, which it expected to last into 2027.
“Today’s announcement represents a major boost to our bold vision on behalf of patients with RAS-addicted cancers,” Revolution’s CEO Mark Goldsmith, M.D., Ph.D., said in the release.
“This funding agreement significantly increases the financial resources we can deploy while preserving optionality as we scale our operations to create the industry-leading global targeted medicines franchise for patients with RAS-addicted cancers based on our highly differentiated RAS(ON) inhibitor portfolio,” Goldsmith added.
Royalty, a buyer of biopharmaceutical royalties, penned a similar financing deal in February to enable Biogen to bankroll the phase 3 development of its lupus candidate litifilimab.
Royalty’s CEO Pablo Legorreta described this morning’s deal with Revolution as a “groundbreaking partnership.”
“This partnership exemplifies a new funding paradigm for highly innovative biotech companies,” Legorreta added. “In contrast to a conventional pharma partnership, this large-scale and flexible funding agreement enables Revolution Medicines to retain control of the clinical development of daraxonrasib, as well as the ability to capture significant value creation that would result from the successful clinical development and commercialization of its pipeline.”