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 (NASDAQ:RVMD) 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.

A baseball resting in a baseball mitt next to a bat in the grass.

Image source: Getty Images.

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 (NASDAQ:SNY) 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.