Rain Oncology Inc. (NASDAQ:RAIN) is a precision oncology company developing therapies that target oncogenic drivers to genetically select patients they believe will most likely benefit. The company's lead product candidate, milademetan, is an oral, small molecule inhibitor of the mouse double minute 2 (MDM2)-p53 complex that reactivates p53.

Business Overview

Rain Oncology was founded in 2017 and is headquartered in Newark, California. The company in-licensed milademetan from Daiichi Sankyo Company, Limited in September 2020 based on the results of a Phase 1 clinical trial, which demonstrated meaningful antitumor activity in an MDM2-amplified subtype of liposarcoma (LPS) and other solid tumors.

Rain's development pipeline is unified by a strategy to target oncogenic drivers through differentiated therapies for which the company is able to genetically select the patients they believe will be most likely to benefit from treatment. The company currently retains global development and commercialization rights to its product candidate, milademetan.

Milademetan Overview

Milademetan reactivates p53, known as the "guardian of the genome," by inhibiting MDM2. In normal cells, MDM2 binds to p53, thereby inducing degradation and allowing normal cells to function properly. In contrast, in tumor cells, the two primary mechanisms by which p53 can be inactivated are mutations in p53 and activation or overexpression of MDM2. Rain has identified potential MDM2 dependence in several solid tumors, which the company believes can be targeted by milademetan.

Clinical Development Plan

Rain is currently evaluating milademetan in several clinical trials, including a randomized, multicenter, open-label, Phase 3 registrational trial (MANTRA) for patients with unresectable or metastatic dedifferentiated (DD) LPS that has progressed on one or more prior systemic therapies, including at least one anthracycline-based therapy. The primary objective of the MANTRA trial is to compare progression-free survival (PFS) between the milademetan treatment arm and the trabectedin control arm.

In November 2021, Rain also initiated a multicenter, single arm, open-label, Phase 2 basket trial (MANTRA-2) evaluating milademetan for the treatment of MDM2-amplified advanced solid tumors. The primary endpoint of this trial is objective response rate (ORR) as measured by RECIST criteria.

Additionally, Rain had planned to initiate a Phase 1/2 basket trial (MANTRA-4) to evaluate the safety, tolerability and efficacy of milademetan in combination with atezolizumab in patients with loss of CDKN2A and wild-type p53 advanced solid tumors who have previously progressed on immune checkpoint inhibitors. However, in May 2023, the company announced that it has terminated plans for the MANTRA-4 clinical trial.

Financials

For the nine months ended September 30, 2023, Rain reported a net loss of $49.6 million, compared to a net loss of $53.0 million for the same period in 2022. The company's research and development expenses were $35.6 million for the nine-month period in 2023, down from $42.3 million in the prior year period, primarily due to the winding down of the MANTRA and MANTRA-2 clinical trials. General and administrative expenses increased to $14.6 million in the first nine months of 2023, compared to $11.3 million in the same period of 2022, driven by higher professional services costs and legal fees.

Rain's cash, cash equivalents and short-term investments totaled $77.3 million as of September 30, 2023, compared to $130.5 million as of December 31, 2022. The company's net cash used in operating activities was $52.5 million for the nine months ended September 30, 2023, compared to $49.9 million for the same period in 2022.

For the full year 2022, Rain reported a net loss of $75.7 million and had no revenue. The company's annual operating cash flow was negative $63.2 million, and its annual free cash flow was also negative $63.2 million.

Liquidity

Rain has incurred significant operating losses since its inception and expects to continue to incur net losses for the foreseeable future as it continues the development of its product candidates. The company has funded its operations primarily through the issuance of convertible promissory notes, convertible preferred stock, and the issuance and sale of common stock through its initial public offering and a registered direct offering in November 2022.

As of September 30, 2023, Rain had cash, cash equivalents and short-term investments of $77.3 million. The company believes, based on its current business plans, that its existing cash, cash equivalents and short-term investments will be sufficient to meet its obligations for at least the next twelve months. However, Rain anticipates that it will require additional capital in the future to continue the research and development of its drug candidates.

Risks and Challenges

Rain faces several risks and challenges in its pursuit of developing and commercializing milademetan and other potential product candidates. These include the inherent risks and uncertainties associated with drug development, such as the potential for delays or failures in clinical trials, the ability to obtain regulatory approvals, and the ability to successfully manufacture and commercialize any approved products.

The company also faces competition from other companies developing therapies that target the same or similar oncogenic drivers, as well as potential pricing and reimbursement challenges that could impact the commercial success of any approved products.

Additionally, Rain's ability to raise additional capital in the future may be adversely impacted by potential worsening global macroeconomic conditions and the disruptions to and volatility in the credit and financial markets.

Outlook

Despite the challenges faced by Rain Oncology, the company remains focused on advancing the development of milademetan and exploring other potential opportunities in the precision oncology space. The company's strategy of targeting oncogenic drivers and genetically selecting patients it believes will most likely benefit from its therapies holds promise, and the ongoing clinical trials for milademetan will be critical in determining the product's potential.

Conclusion

As Rain Oncology navigates the complexities of drug development and the evolving oncology landscape, investors will be closely watching the company's progress and its ability to execute on its strategic priorities. While the road ahead may not be without obstacles, Rain's commitment to innovation and its focus on precision medicine could position the company for potential long-term success in the dynamic and competitive world of oncology.