Arcus Biosciences(RCUS) - 2025 Q2 - Quarterly Results

Executive Summary Introduction and CEO Statement Arcus Biosciences announced Q2 2025 financial results and pipeline updates, with the CEO highlighting casdatifan's potential as a best-in-class HIF-2a inhibitor for ccRCC and confirming sufficient funding for key clinical trials - Arcus Biosciences is a clinical-stage global biopharmaceutical company focused on developing differentiated molecules and combination therapies for cancer patients[2] - CEO Dr. Terry Rosen stated that data from over 125 patients treated with casdatifan monotherapy or in combination with cabozantinib suggest its potential as a best-in-class HIF-2a inhibitor for clear cell renal cell carcinoma (ccRCC)[3] - The company is rapidly advancing casdatifan's development in multiple ccRCC settings, including the global Phase 3 PEAK-1 trial for IO-experienced patients and the Phase 1b/3 eVOLVE-RCC02 trial for first-line metastatic patients[3] Pipeline Update Casdatifan (HIF-2a Inhibitor) Preliminary ARC-20 study data for casdatifan + cabozantinib in IO-experienced metastatic ccRCC patients showed a 46% confirmed overall response rate (ORR) with good tolerability, and two pivotal Phase 3 studies (PEAK-1 and eVOLVE-RCC02) have commenced, with more mature data anticipated - Preliminary data from the ARC-20 study of casdatifan + cabozantinib in IO-experienced metastatic ccRCC patients showed that nearly half of patients had a confirmed response to the combination therapy, which was also well-tolerated[5] - PEAK-1, a Phase 3 study evaluating casdatifan + cabozantinib in IO-experienced ccRCC, and eVOLVE-RCC02, an AstraZeneca-sponsored Phase 1b/3 study evaluating casdatifan + volrustomig in first-line metastatic ccRCC, have both been initiated[5][6] - As of the data cutoff (March 14, 2025), casdatifan + cabozantinib treatment showed a 46% confirmed overall response rate (ORR) in patients with at least 12 weeks of follow-up, with tumor shrinkage observed in almost all patients[10] - More mature data for the casdatifan monotherapy cohort from the ARC-20 study are expected in Fall 2025, with more mature data for the casdatifan plus cabozantinib cohort and preliminary data from new ARC-20 cohorts anticipated in 2026[10] Domvanalimab (Fc-silent anti-TIGIT Antibody) & Zimberelimab (anti-PD-1 Antibody) Overall survival (OS) data from the Phase 2 EDGE-Gastric study of domvanalimab plus zimberelimab with chemotherapy in GI cancers will be presented at the 2025 ESMO Congress, with the first Phase 3 OS data from the STAR-221 study expected in 2026 - An abstract for overall survival (OS) data from the Phase 2 EDGE-Gastric study evaluating domvanalimab + zimberelimab + chemotherapy in gastrointestinal (GI) cancers has been accepted for presentation at the 2025 European Society for Medical Oncology (ESMO) Congress in October[5][10] - The first Phase 3 OS data for domvanalimab + zimberelimab will come from the ongoing STAR-221 study, evaluating domvanalimab + zimberelimab + chemotherapy in PD-L1 all-comer, treatment-naive, unresectable or metastatic upper GI adenocarcinomas, with results anticipated in 2026[10] Quemliclustat (Small-Molecule CD73 Inhibitor) Quemliclustat received US FDA orphan drug designation for pancreatic cancer, and its Phase 3 PRISM-1 trial (in combination with gemcitabine/nab-paclitaxel for first-line metastatic pancreatic ductal adenocarcinoma) is rapidly enrolling patients, with enrollment expected to complete in Q3 2025 - The U.S. Food and Drug Administration (FDA) granted orphan drug designation to quemliclustat for the treatment of pancreatic cancer[10] - PRISM-1, a Phase 3 trial of quemliclustat in combination with gemcitabine/nab-paclitaxel versus gemcitabine/nab-paclitaxel in first-line metastatic pancreatic ductal adenocarcinoma, is rapidly enrolling, with enrollment expected to complete in Q3 2025[10] Etrumadenant (Adenosine A2a/A2b Receptor Antagonist) Despite FDA confirmation of etrumadenant's registrational potential in third-line metastatic colorectal cancer, Arcus and Gilead decided not to pursue a Phase 3 study due to strategic priorities, and Gilead returned the etrumadenant license to Arcus in June 2025 - Arcus and Gilead agreed not to advance a Phase 3 study for etrumadenant in third-line metastatic colorectal cancer (mCRC) at this time, despite FDA feedback confirming the program's potential for a registrational path[7] - In June 2025, Gilead returned its license rights to etrumadenant to Arcus[7] Early Discovery Programs Arcus is conducting multiple research and preclinical programs targeting validated oncology and inflammation targets, with the next development candidate expected to be a small molecule for an inflammation target - Arcus is conducting multiple research and preclinical programs targeting validated oncology and inflammation targets[8] - Arcus anticipates that the next development candidate to enter the clinic will be a small molecule targeting an inflammation target[8] Financial Performance Second Quarter 2025 Financial Highlights Arcus achieved significant revenue growth in Q2 2025, primarily due to a $143 million cumulative revenue catch-up adjustment related to etrumadenant license return, while R&D expenses increased, net loss significantly narrowed, and $927 million in cash, cash equivalents, and marketable securities are sufficient to support initial key clinical data readouts Key Financial Data for Q2 2025 | Metric | Q2 2025 (million USD) | Q2 2024 (million USD) | Change (million USD) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Revenue | 160 | 39 | 121 | 310.26% | | Research and Development Expenses | 139 | 115 | 24 | 20.87% | | General and Administrative Expenses | 29 | 30 | -1 | -3.33% | | Net Income (Loss) | 0 | (93) | 93 | -100.00% | | Cash, Cash Equivalents, and Marketable Securities (End of Period) | 927 | N/A (vs. Dec 31, 2024: 992) | -65 | -6.55% | - Revenue growth was primarily driven by a $143 million cumulative revenue catch-up adjustment related to the cessation of future etrumadenant development and Gilead's return of its license rights[15] - Research and development expenses increased primarily due to higher CMC costs and increased early-stage development activities (Phase 2 activities for casdatifan), partially offset by lower STAR-221 costs[15] - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $927 million, a decrease from $992 million as of December 31, 2024, but the company believes existing funds are sufficient to support initial key data readouts for domvanalimab, quemliclustat, and casdatifan (including PEAK-1)[9] Consolidated Statements of Operations This section presents Arcus Biosciences' consolidated statements of operations for Q2 and the first half of 2025, detailing financial data such as license and development service revenue, other collaboration revenue, R&D expenses, G&A expenses, and net income (loss) Consolidated Statements of Operations (Unaudited) | | Three Months Ended June 30, | | Six Months Ended June 30, | | :-------------------------------- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Revenue (million USD): | | | | | | License and development service revenue | $152 | $28 | $172 | $163 | | Other collaboration revenue | 8 | 11 | 16 | 21 | | Total Revenue | 160 | 39 | 188 | 184 | | Operating Expenses (million USD): | | | | | | Research and development | 139 | 115 | 261 | 224 | | General and administrative | 29 | 30 | 57 | 62 | | Impairment of long-lived assets | — | — | — | 20 | | Total Operating Expenses | 168 | 145 | 318 | 306 | | Operating Loss | (8) | (106) | (130) | (122) | | Non-Operating Income (Expense) (million USD): | | | | | | Interest and other income, net | 10 | 13 | 21 | 26 | | Interest expense | (2) | — | (3) | (1) | | Total Non-Operating Income, net | 8 | 13 | 18 | 25 | | Income (Loss) Before Income Taxes | — | (93) | (112) | (97) | | Income tax expense | — | — | — | — | | Net Income (Loss) | $— | $(93) | $(112) | $(97) | | Net Income (Loss) Per Share: | | | | | | Basic | $— | $(1.02) | $(1.09) | $(1.09) | | Diluted | $— | $(1.02) | $(1.09) | $(1.09) | | Shares Used in Net Income (Loss) Per Share Calculation (millions): | | | | | | Basic | 106.1 | 91.1 | 102.3 | 88.6 | | Diluted | 106.5 | 91.1 | 102.3 | 88.6 | Selected Consolidated Balance Sheet Data This section provides selected consolidated balance sheet data for Arcus Biosciences as of June 30, 2025, and December 31, 2024, including cash, cash equivalents, marketable securities, total assets, total liabilities, and total stockholders' equity Selected Consolidated Balance Sheet Data (Unaudited) | | June 30, 2025 (million USD) | | December 31, 2024 (1) (million USD) | | :-------------------------------- | :-------------------------- | :--- | :--------------------------------- | | Cash, cash equivalents, and marketable securities | $927 | | $992 | | Total assets | 1,075 | | 1,150 | | Total liabilities | 526 | | 665 | | Total stockholders' equity | 549 | | 485 | Additional Company Information About Arcus Biosciences Arcus Biosciences, a clinical-stage global biopharmaceutical company founded in 2015, is dedicated to developing differentiated molecules and combination therapies for cancer, advancing multiple investigational drugs into registrational clinical trials - Arcus Biosciences is a clinical-stage global biopharmaceutical company focused on developing differentiated molecules and combination therapies for cancer patients[11] - The company has advanced multiple investigational drugs into registrational clinical trials, including domvanalimab, casdatifan, and quemliclustat[11] - Domvanalimab, quemliclustat, zimberelimab, casdatifan, etrumadenant, AB598, and AB801 are all investigational molecules, not yet approved by any regulatory authority, and their safety and efficacy have not been established[12] About the Gilead Collaboration Arcus established a 10-year strategic collaboration with Gilead in May 2020, granting Gilead time-limited exclusive options for all Arcus clinical programs, and they are co-developing zimberelimab, domvanalimab, and quemliclustat, with the collaboration extended to research targets in oncology and inflammatory diseases - Arcus established a 10-year collaboration with Gilead in May 2020 to strategically advance its portfolio[13] - Gilead obtained time-limited exclusive options to all clinical programs during the collaboration term[13] - Arcus and Gilead are co-developing three investigational products: zimberelimab, domvanalimab, and quemliclustat, and have expanded the collaboration to research targets in oncology and inflammatory diseases[13] Forward-Looking Statements & Risks This press release contains forward-looking statements regarding future events or results, reflecting management's current beliefs and expectations, but subject to known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - This press release contains forward-looking statements, and all statements regarding future events or results reflect management's current beliefs and expectations[14] - All forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause Arcus's actual results, performance, or achievements to differ materially from those expressed or implied in the forward-looking statements[14][16] - Risk factors include, but are not limited to: preliminary and interim data not guaranteeing similar future data; unexpected adverse events in investigational products; difficulties or delays in initiating or conducting clinical trials; challenges in managing collaboration activities; changes in the competitive landscape; and uncertainties inherent in drug product development and clinical trials[16] Investor & Media Contacts This section provides contact information for Arcus Biosciences' investor relations and corporate affairs departments, including names, titles, and contact details - Investor inquiries: Pia Eaves, Vice President, Investor Relations & Strategy, Phone: (617) 459-2006, Email: peaves@arcusbio.com[18] - Media inquiries: Holli Kolkey, Vice President, Corporate Affairs, Phone: (650) 922-1269, Email: hkolkey@arcusbio.com; Maryam Bassiri, Associate Director, Corporate Communications, Phone: (510) 406-8520, Email: mbassiri@arcusbio.com[18]