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Revolution Medicines to Terminate EQRx Pipeline in All-Stock Acquisition

NEW YORK – Revolution Medicines will acquire EQRx in an all-stock transaction worth more than $1 billion and terminate EQRx's entire R&D program, the companies announced Tuesday.

In May, EQRx cut its headcount and slashed three of its programs in an attempted corporate "reset" after its plan to disrupt the drug industry by offering competitively priced "fast follower" products didn't pan out. One of the drugs EQRx had high hopes for was the third-generation EGFR inhibitor aumolertinib, which last year beat AstraZeneca's first-generation EGFR inhibitor Iressa (gefitinib) in a head-to-head trial in non-small cell lung cancer.

The company terminated license agreements for three programs in May and announced it would seek commercial partnerships for aumolertinib. That left the CDK4/6 inhibitor lerociclib as EQRx's only remaining clinical-stage program. Now, following the acquisition, EQRx will begin to wind down its remaining programs and return intellectual property to its partners, who can then independently make decisions on whether to advance those assets further.

Under the terms of the agreement, stockholders of Cambridge, Massachusetts-based EQRx will receive $200 million in Revolution shares, or 7,692,308 shares at $26 per share, plus $870 million in shares at a price that is a 6 percent discount to the five-day volume-weighted average of the Revolution share price around when EQRx stockholders vote on the transaction.

EQRx stockholders representing more than 40 percent of voting shares of the firm have agreed to vote their shares in favor of the transaction, which is slated to close in November. Once the deal closes, Revolution will designate one EQRx director to serve on its board of directors, and EQRx will stop trading on the Nasdaq.

Redwood City, California-based Revolution said the deal will add more than $1 billion in net cash to its balance sheet, which it will use to advance its pipeline of RAS inhibitors in multiple RAS-driven cancers. "This transaction is focused entirely on strengthening our cash position," Revolution CEO Mark Goldsmith said in a conference call Tuesday morning to discuss the acquisition. "This deal will enable us to reinforce and sustain our parallel development approach for our extensive RAS(ON) inhibitor pipeline in multiple RAS-driven cancers."

In the first quarter of this year, Revolution reported $7.0 million in revenue compared to $7.6 million in Q1 2022. The revenue was from Revolution's collaboration with Sanofi on SHP2 inhibitors. The company reported $68.1 million in net loss and $909.8 million in cash, cash equivalents, and marketable securities as of March 31.

Goldsmith added that with the additional cash from the acquisition, Revolution does not anticipate having to enter a development or partnership agreement that would affect its product rights in the US and that it can be "especially discerning" about timing in terms of potential partnerships outside the US.

"It's important to note that our proposed acquisition of EQRx reflects both companies' confidence in our ability to build on scientific advances and clinical momentum and to deploy this amount of capital effectively," Goldsmith said.

Revolution is planning to start a pivotal trial of RMC-6236, an inhibitor of the active, GTP-bound form of RAS, or RAS(ON), in early 2024. It is currently testing RMC-6236 in a Phase I/Ib trial in patients with advanced solid tumors harboring KRAS G12 mutations, including KRAS G12D, KRAS G12V, and KRAS G12R. In preclinical studies, RMC-6236 suppressed diverse mutant RAS cancer drivers and cooperating wild-type RAS proteins and showed robust anti-tumor activity. In this trial, the firm aims to establish the safety and tolerability of RMC-6236 as well as its overall response rate and durability of response. The company will also look for signals across KRAS G12-mutated tumors for patient selection.

Revolution has in the works a Phase I/Ib trial of RMC-6236 in combination with another investigational RAS(ON) inhibitor, RMC-6291, and is planning to continue studying RMC-6291 as a single agent in patients with KRAS G12C-mutant solid tumors. Revolution expects to present clinical activity data for RMC-6236 at the European Society of Medical Oncology's annual meeting and initial clinical findings on RMC-6291 at the 2023 AACR-NCI-EORTC International Conference on molecular targets and cancer therapeutics, both in October.

Goldsmith said that Revolution and EQRx timed the closing of the acquisition in November to fall shortly after those presentations at the end of October to take advantage of expected positive readouts in the pricing of the deal.

"[The transaction] is designed such that 80 percent of the stock exchange rate will be determined in close proximity to the shareholder votes, and those shareholder votes won't occur until after the data are disclosed," Goldsmith said. "What we've effectively done is we've secured access to a billion dollars by achieving a commitment by EQRx to participate in this transaction … but it largely gets priced later."

Goldsmith also addressed Revolution's intentions for EQRx's pipeline and staff. "In line with our continued prioritization and focus of our resources on novel drug mechanisms of action targeting RAS-addicted cancers, we do not intend to advance EQRx's research and development portfolio," Goldsmith said. "EQRx will commence a process to wind down these programs, and we will work with EQRx to help ensure the well-being of patients and respectful treatment of any affected EQRx employees."

Guggenheim Securities is Revolution Medicines' financial adviser in the deal, and Latham & Watkins is its legal counsel. EQRx has engaged Goldman Sachs as lead financial adviser, MTS Health Partners as financial adviser, and Goodwin Procter as legal counsel.