The notoriously difficult-to-target RAS cancer mutations may soon have a new enemy, and 230,000 U.S. cancer patients with RAS mutations may soon have good news. Revolution Medicines (RVMD -0.41%) and its lead compound, RMC-4630, are looking to become the backbone of treatment for RAS-driven cancers -- an opportunity worth more than $20 billion in the U.S. alone.

Currently in phase 2 trials, RMC-4630 is an oral therapy that Revolution's management team believes can be used either as a monotherapy or in combination treatment for cancer patients with tumors containing RAS mutations. In early trials, RMC-4630 has shown anti-tumor activity across multiple solid tumors, and there are multiple clinical readouts coming in the next year that may push Revolution Medicines even further past the 55%-plus gains investors have enjoyed since the company's February 2020 IPO.

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Multiple shots with big partners

This April, at the American Association for Cancer Research Conference (or AACR21, for short), we will get a preview of more dose-escalation and safety data regarding monotherapy treatment of RMC-4630 in solid tumors. Later in 2021, the company will report clinical data for combination treatment with Amgen's sotorasib for non-small cell lung cancer. And in 2022, management expects to report data on combination treatment with Roche's cobimetinib in relapsed/refractory solid tumors with KRAS mutations. Additional early phase studies looking at RMC-4630 in combination with Merck's Keytruda for solid tumors and in combination with AstraZeneca's osimertinib in non-small-cell lung cancer are under way as well. That's a lot of players on base, and a lot of heavy-hitting partners.

The potential market is huge

With precision oncology medications typically fetching north of $100,000 per patient per year and a total addressable RAS market in the U.S. alone of 230,000 patients, that's an impressive $23 billion of potential. Revolution Medicines currently sports a $3.6 billion market cap, which makes it look cheap compared with peers; consider Mirati Therapeutics' $9 billion market cap, and the fact that Mirati's lead compound, adagrasib, targets only a subset of RAS mutations -- about 30,000 patients in the U.S. annually.

This sizable total addressable market has not gone unnoticed by big pharma, with Revolution Medicines already securing a deal with Sanofi (SNY -0.25%) for RMC-4630. Sanofi agreed to cover all research and development (R&D) costs for the program -- likely accelerating its development -- while Revolution Medicines gave up worldwide rights to the drug in exchange for royalties in the high single digits to the mid-teens and a 50/50 split on U.S. profits and losses. Given that Revolution Medicines is looking to make RMC-4630 a backbone for the treatment of all 230,000 oncology patients in the U.S. with RAS-driven cancer, many larger pharmaceutical companies are likely watching closely, and investors will want to do the same.

Biotech investors looking for a home run may want to take a look at Revolution Medicines at its current $3.3 billion market cap and see whether big-swinging RMC-4630 can knock phase 2 trials out of the park. If so, both investors and patients may win big in the end.